Craig Vachon – The Knucklehead of Silicon Valley – Author Glassboard
CRAIG VACHON [00:00:06] Hi, my name is Craig Vachon, and I am a Silicon Valley entrepreneur and investor. And I am also the author of The Knucklehead of Silicon Valley. It’s a comedic spy thriller, and I hope you’ll consider reading it. One of the topics that the novel addresses is how to raise investment in Silicon Valley from a venture capitalist and I thought I’d share a glass board with you to talk about what’s the best way to earn investment from the venture capital community. So we always start and I guess we will always end with the first and most important aspect, and that’s team. The team is really what the venture capitalist is most concerned with. A team of entrepreneurs is typically people who have worked together in the past, they’ve experienced the highs and lows of success and failure. And they know how to prioritise amongst the many different aspects of starting a new business. The team is entirely about the people that you think are most able to support your endeavour, your effort. And so having recruited the very best team possible is really a mark of what a venture capitalist is looking for. If you’ve just recruited a bunch of your friends, it’s perhaps something that might be a whole lot of fun, but not necessarily something that a venture capitalist wants to invest in. They want to invest in people that get the job done, that know how to do the solve that you’ll be putting forth.
CRAIG VACHON [00:01:59] The second aspect is TAM or total addressable marketplace. And this is really important when it comes to understanding how big of an opportunity it is that the investor is going to look at in terms of your industry, the total addressable marketplace is how much revenue opportunity, how much marketplace opportunity is there with your particular endeavour? It’s critical that you know exactly who your the TAM is. How what’s the scale of it? Because inevitably TAM shrinks over time. It starts out large and then tends to get smaller as the solution comes to marketplace. Really critical that you show expertise in knowing your TAM and knowing the competitors that operate in that TAM.
CRAIG VACHON [00:03:08] The third aspect is scale. Investors very much want to invest in things that you build once and deploy a billion times or sell a billion times. And this is critically important as as investors look at their overall investment mantra. What it is they’re trying to achieve? And so scale is really important. It’s not something that is easily achieved. Most people are more comfortable in a consulting type environment. But the scale aspect is one where the very best companies that are invested in by the VC community demonstrate again and again. The fourth element is sustainable differentiation. Because disruption is what venture capitalists are typically looking for, the ability to differentiate and have that as a sustainable aspect of your business is really important. With companies like Amazon and Google and Facebook. If they like your idea, if your idea is working and they can throw a hundred or a thousand engineers at it and copy it tomorrow, then that’s not something necessarily that a venture capitalist wants to invest in. Because Google and Amazon and Facebook probably will copy it if they give him the chance. And it is successful. And so, you know, think, be thoughtful around how your product is different and how it can remain so.
CRAIG VACHON [00:04:54] And finally, and, you know, often the most impactful is, you know, early customer traction or early customers solutions showing a venture capitalist that customers are willing to pay for the product that you are developing or that you have developed, that not just this is a cool idea, but that people are actually going to use it and that people are going to actually pay for it. I think this gives you a fulsome look at what exactly venture capitalists are looking for. It gives you an idea of sort of the importance. It always starts and ends with team. There’s importance in each one of these elements that you need to be thoughtful about and you need to bring forth in your presentation. And finally, you know, there’s this element of understanding the whole environment that how these aspects interact. That’s what the venture capitalist is really keyed in on to find out whether or not you truly understand the interactions of these important elements. And so I hope that’s been helpful today. And my name again is Craig Vachon. I’ve written a book, a novel called The Knucklehead of Silicon Valley and it demonstrates this particular technique in earning investment from the venture capital community. Thank you.