Helping Entrepreneurs Succeed: Mark Suster (Fundraising)

by Scott Edward Walker on June 24th, 2011

To Our Clients & Friends: Welcome to our weekly series entitled “Helping Entrepreneurs Succeed.”  Each week, we share a favorite video of a successful entrepreneur, investor or business leader on a variety of topics.  This week, we again present Mark Suster, a partner at GRP Partners, blogger extraordinaire, and a very smart entrepreneur turned VC.

Below is Mark’s recent keynote address at the 7th Founder Showcase in San Francisco entitled “Getting Funded in a Frothy Market.”  Please note that the speech is a little longer than most of our videos (40+ minutes), but well worth watching in its entirety.  Indeed, it is not only solid (with some great nuggets), but also entertaining.  Following his introduction, Mark essentially divides the speech into five parts, including the following respective quotes:

From Whom Should I Raise Funds? (starting at 8:14)

“There are no right or wrong answers from whom you should raise money….There are pros and cons to each type of investor.”

Friends and family are the “worst” type of investors because they are “unsophisticated”… and do not understand that “most businesses fail.”

The best type of angels are those that are “sophisticated” and are “rational, patient” investors.  Some angels, however, are the “first to run for the door when things get tough.”

“Raising venture capital is like adding rocket fuel to your company… — which leads to a lot of bad behavior.”

How Much Should I Raise? (starting at 16:01)

“Try to raise 18-24 month capital.”

How much depends if “you’re on the express train or the local train.”

“There are times when ‘fat’ matters.”

When Should I Raise? (starting at 20:59)

“When the hors d’oeuvres are passed, take two.… But, put one in your pocket.”

How Do I Get the Round Done? (starting at 22:53)

“If you’re raising angel [funds], you need an anchor investor.”

“You have to ask for the order.”

“You have to get the best anchor investor you can get… and the reality is everyone else is all sheep.”

“There is a great ability to judge entrepreneurs by seeing how they approach us – as a metaphor for their entrepreneur life.”

“In the era of social networks, if you can’t figure out how to get access to a VC, hang-up your cleats now.”

“We want the 4 M’s: management, market size, money, momentum.”

“VC’s want meaningful ownership … and the ‘fairway’ is 25-33% of your company.”

“The average VC – traditional VC – does 2 deals per year… from maybe 1,000 approaches.”

“Run a process” and create a “sense of urgency.”

Where Are We Headed?  (starting at 30:53)

“There is very good news and reasons to be optimistic about 2011…and there are some clouds on the horizon.”

“The market is flowing now…funding is available now.”

I indeed hope you enjoy Mark’s speech.  Many thanks, Scott

7th Founder Showcase – Mark Suster Keynote from Founder Showcase on Vimeo.

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