Inaki Berenguer, MBA '09

Back from the Silicon Valley Trek

I am back from the Silicon Valley trek, one week of visits with leaders of the California venture capital community and with founders and CEOs of startups and successful enterprises in the life sciences, medical technology, software, information technology, advanced materials, and new energy fields based in Silicon Valley, California. It has been one of the most inspiring experiences I have had about entrepreneurship.

We were located in Stanford Park Hotel, next to Stanford University and Sand Hill Road. We have visited startups such as Meraki, Plusmo, Intelleflex, Adify, Mywaves.com, Mobi.tv, Nebuad, Aeroscout, or Telenav, meeting with their founding teams. We have also had receptions at more established (but leading) companies such as Salesforce.com, VMWare or Google. We have also met partners of VCs such as Venrock, Morgenthaler or Menlo Ventures. And the week ended with a reception on the top of the Bank of America building in San Francisco with MIT alumni and representatives from all these companies. During the next days I plan to post about these experiences.

After the trip, we visited some wineries in Napa Valley and went skiing to Lake Tahoe.

This week I am doing the Massachusetts Tech Trek visiting some VCs in the Boston Area (Charles River Ventures, Atlas Ventures or General Catalyst Partners) and Tech Companies (Akamai, Care.com, JumpTap, Novell, Visible Measures, or Hubspot).

Joshua Ruch, co-founder of Rho Venture Capital

Joshua Ruch, Managing Partner at Rho Venture Capital gave us a talk about Venture Capital. Previously he was an investment banker and received an MBA from the Harvard Business School. Joshua co-founded Rho in 1981 and they have offices in NY, Palo Alto and Montreal. Rho ventures has invested in ~200 companies, including Ciena, Compaq, Tripod or Tacoda and seeks to invest and participate in all stages of financing, from seed to the IPO. Their latest fund raised ~$700M.

Some of the things he pointed out:

• Nowadays, if you want to make money, do not go to Private Equity or VC; go instead to a Hedge Fund.
• Nowadays is difficult to take a company public if it does not have ~$65M in revenues. In 1999, with $10M or less you went public.
• When selecting a VC, consider the knowledge of their network in the company ecosystem and the individual General Partner track record with companies at similar stage and in the same company ecosystem.
• Rho invests only in trusted sources and he is usually reactive (i.e., BPlans go to him).

Sunil Dhaliwal, General Partner at Battery Ventures

Sunil Dhaliwal, a General Partner at Battery Ventures, gave us a talk about working in a VC firm. Since 1983, Battery has been investing in technology and innovation worldwide. Some of their investments include Airespace (acquired by Cisco), Akamai, Fore Systems, Infoseek. Currently, they have $3 Billion in committed capital and ~30 professionals with 60% of their operations in Boston.

He mentioned that they usually receive ~10,000 ideas a year and they only make ~20 investments, which means that 0.2% of the proposals get funded! However, the role of a VC is to source as many deals as possible so the best way is to be active in conferences, networking events, organized meals, university events, etc. and never have lunch or dinner alone.

He talked about the dimensions they take into account to pick an invesment. In particular, he ranked in order of preference:
1. Market opportunity
2. Team
3. Technology/Product

He also talked about how long it takes to educate VCs about markets that do not exist. As an example, he mentioned that the founders of Akamai, talked to 4 partners at Battery Ventures over a long period of time and the last one was the one that decided to invest.

He also talked about careers in VCs. It is all about fit. Most partners are already millionaries so they will only go to an office because they like it and they can work with the people they like.