Southeast VC

Asking for Help? Just Follow Up.

As a small VC firm, we are challenged with balancing the time we give supporting our existing portfolio companies vs other companies that may ask for our help in the community. The people that know us, know that we love being incredibly helpful and supportive to anyone trying to grow their business. Our region needs it.

So, as part of this support, we get asked a lot to help make email introductions. The volume of requests have grown considerably over the last year. Obviously, most of this comes from our portfolio companies, but a growing percentage comes from others in the business community. This includes entrepreneurs, job hunters, other VCs and service providers.

But here is what I found interesting lately. When someone asks me to make an introduction, I ask that person to put together an email that introduces themselves and presents what they want. It can be very brief. Basically I am looking for an email I can easily just forward to the person they want to be introduced to. I am trying to cut down on the time I would have to spend putting it together myself. Plus, it helps having all the facts right rather than me screwing it all up in pitching the wrong message.

The person I am talking to ALWAYS agrees to take the first step and send me the email. But you know what REALLY ends up happening? Nothing. The person rarely takes action in following up and the ask disappears.

I would say me asking for an email like this cuts down intros by about 80%. Seriously. I hope I am not being a jerk, but I feel like it is effective in screening out people that aren't willing to put the simple effort in. And if they're not, why should I care? Most importantly, I feel like this allows me to really focus on the people that need it most.

Calling All Entrepreneurs - North Carolina

This morning I spoke with Scot Wingo, CEO at ChannelAdvisor and we decided to team up again and run Calling All Entrepreneurs next week at his office - July 16 from 9 to 1pm.

This is a great way for an entrepreneur to meet informally with a VC and a 3 time entrepreneur and get some great feedback on your pitch and business. Scot is on our Tech Advisory Committee and is well known with the tech community. I've seen him in action and he offers great advice to entrepreneurs.

What should you include in your pitch to us? In 10 minutes, tell us:

- who you are and your background

- what does your company do?

- how your company has evolved over the last 12 months, where it is today and what do you want it to become?

Some entrepreneurs use a deck, some just speak to us. Do whatever is most comfortable for you and your style. There are no rules here.

We will save 5 minutes at the end for Q&A/comments from Scot and me.

If you're interested in swinging by, just click on the "booknow" button at the top right hand corner of my blog. You can pick any of the open times that work best for you. That also helps make sure I don't screw up the schedule. If you have any problems with it just email me jason@southerncapitolventures.com.

Also, as always, this is limited to entrepreneurs that are either software, e-commerce or digital media related. If you would like more info on the format for this, search through my blog. There are a lot of stories about this in the past. You can also search for stories on Google.

Looking forward to next week!

Want to Get Plugged into North Carolina? Best Way: Join CED

I have to put in a plug for CED and the timing is good because I just heard they are $3,500 away from reaching their 2009 membership goal! As extra incentive, if you join today or tomorrow (Tuesday), you will be entered into a drawing to win this.

If you want to join, call Lilith Anderson, associate director of development directly at 919-226-0468.  Or, just fax this form to 919-549-7405. They also have an ad on their home page.

Questions about CED? Let me know! I am on their board and our firm has been active with them for years. So, just call or email me if I can help.

Recent Observations

As we go into a new week, some random comments:

- Too good to be true. I am tired of seeing these charts from companies pitching us how they have the complete product offering, but their competitors have all these holes. You have met all your customer's wishes? Would your competitors report similar findings?

- Money is still out there especially for companies with traction. There are few quality companies out there. When one pops up, there is often heavy competition from the VCs and yes, even today the entrepreneur can still be in the driver's seat.

- Think about the big picture. Building out applications for the iPhone, Facebook, Twitter, etc seems like fun and you can make a biz out of it apparently, but it isn't where the real money is. Where the money is though is being the platform where everyone wants to build applications around YOU. Its great if you are Twitter, Facebook or Apple and have all these companies emerge around you focused on developing games and features to make your platform easier to use and more sticky. Just think about that if you're swinging for the homerun.

- There is a growing trend lately with companies coming to us lately asking for less than 300k. A couple were 50-100k including a software company with 3 guys and a million in sales. Entrepreneurs are trying to do more with less. And this includes anywhere from the 1st time entrepreneur to guys that have done it a few times.

- We keep adding. Its business as usual for us at SCV including recent trips to Atlanta, Northern Va, DC, Maryland and in case you missed it, 2 weeks ago we announced our latest invetsment in Baltimore-based AVIcode. And a final note. Congrats to the guys at ReverbNation for announcing last week the deal with Microsoft. If you're into free music from new artists, you can learn more about it here.

Calling All Entrepreneurs - Atlanta!

David and I will be down in Atlanta next week on June 10 and 11. We were an original sponsor of CapitalLounge and will be at that the night of June 10th.

On June 11, we will have Calling All Entrepreneurs in Atlanta from 7-10am. We will find a place close to the ATDC. Again, any entrepreneur or aspiring entrepreneur is welcome to set up a time to come meet with us for 10 minutes. We will try and pack in as many meetings as possible and the coffee is on us! Read my prior post on this so you understand the structure and background. We did  this down in Atlanta a while back and filled it up quickly.

Just email me jason AT southerncapitolventures.com to schedule a time.

Calling All Entrepreneurs - RTP

Its back! We're having Calling All Entrepreneurs next week - Wed, June 3. My partner David Jones and I will be camped out at Carolina Cafe on Harrison Ave in Cary, NC from 7 to 9am. We're happy to meet any entrepreneur or aspiring entrepreneur. The only thing we ask is that you have to be in one of these industries: e-commerce, software, healthcare IT, digital media or wireless. Those are the industries we focus on.

So, email me and set up time to grab a quick cup of coffee with us. To fit in as many people as we can, we are setting up time in 10 minute blocks. You will have to keep the conversation real focused, but we have done this format before and it has worked well for everyone.

For background on Calling All Entrepreneurs check out this, this, this and this.

Open Source Law

I never thought that I'd see this come from a law firm, but Wilson Sonsini built a Term Sheet Generator, which allows entrepreneurs to answer an online questionaire and build out a term sheet for financing. I went through all the questions and it includes a nice tutorial and explanations of different terms, trends and market data.

Are you a 1st time entrepreneur and want to familiarize yourself with terms? Or a repeat entrepreneur that wants to brush up? Whatever the case, this could be a really great tool to save you some $$$ when starting out.

Thanks to Altgate for posting a story about this and DJ for pointing it out.

Just curious - What do the other lawyers think about this? Any input?

New Employees Suck :)

How many times have you asked a company how many employees they have and you almost measure their success just by that number. NOT by revenue, or profits or revenue by employee. Its JUST "by employees." The higher the number with the better. The company with 500 employees MUST be more successful than one that has 50. And of course fast hiring growth can only mean one thing.... things must be going really well.

A few years ago, I remember an entrepreneur I know well said that he will have 2,000 employees by X year. I think it represented something like 10x growth in headcount at the time. People around him seemed absolutely blown away and he was viewed almost as a hero. Should that goal be rewarded? Economic developers probably drooled over the forecast. What about investors? Maybe a different story.

Anyway, I was thinking about this the other day when I had coffee with an entrepreneur that I respect a lot. Their business is going strong, scaling fast and they are still forecasting doubling revenue in 09 to a little over $3m. The great thing is they haven't raised a lot of money and they operate the company with 6 full time employees. The entrepreneur said they only hire someone when it becomes absolutely painful and they absolutely have to. And even then.... they still don't want to.

That story quickly reminded me of an entrepreneur of a really large e-commerce company DJ and I met a year ago. They are profitable, running strong and have created a recognizable brand. Anyway, he told us "new employees suck." Don't misunderstand. He LOVES his employees. But he dreads hiring MORE people which adds more expenses to the business. He prefers a scalable business model which can add revenue without having to add heads eating into their profits.

Competing Against Industry Giants

I was thinking the other day about the impact of today's market on the public and private markets more longer term. I shared this with my partners, but here are some of my thoughts:

This weaker market is creating a wider moat for the strong public companies. Actually, let me clarify - the ones that operate in capital intensive industries. Why? Well, let's use Cisco since I just bought some shares a few days ago using the logic I am using here. Those guys have over $30 billion in cash. But their private competitors have a harder time accessing capital and certainly can't go public. Going public gives their competitor sthe ability to press the pedal down on development, sales, marketing, etc and the currency to make acquisitions themselves! But now that same private company is dependent on the private markets to carry it through to compete against .... Cisco? Ouch.

As I mentioned in a previous post, I see a lot of larger companies focusing on their core products and cancelling new projects. This creates a GREAT opening for the smaller startup to attack. But then the costs factor in and that can significantly hold back the challenger. The advantage for the smaller startup in this market really only exists if the product isn't so capital intensive. The ability for a capital intensive business to effectively compete today is significantly limited.

Good for Cisco, bad for startups.

Facebook Co-Founder Chris Hughes to Speak at Venture 09

Chris Hughes, co-founder of Facebook just joined the lineup of speakers at CED's Venture 09. The 26th annual venture conference moves back to Pinehurst, NC and will be held April 22-23. Chris was also New Media Strategist for President Barack Obama's presidential campaign and recently joined my friends at General Catalyst as an EIR. Chris joins the speaker lineup that also includes John Denniston, a partner with Kleiner Perkins and John Stumpf, CEO of Wells Fargo.

And as an offer exclusive to SoutheastVC readers, (only if you haven't registered yet), save $50 by calling Jessica Hegele at CED and mention this post. Her number is 919-226-0464. Thanks to CED for providing that discount!