Meeting with Atlas Venture

In January, a group of 10 Sloanies visited the Boston headquarters of Atlas Venture. Eric Hjerpe, a partner in the technology sector and MIT Sloan alumni, was our host. Peter Shannon from Atlas Venture also had breakfast with us.

Atlas Venture has an early stage focus. Since 1980 they have invested $2.5B. Since 1990 they have made ~350 investments, with ~70 IPOs and ~110 exits via M&A. Currently they have ~100 active portfolio companies.

Some things Eric pointed out:

• Early stage has a location bias (i.e., invest locally). VCs do not want to invest in a place which takes one day to arrive. Moreover, in early stage there are many board meetings.
• To an investor, how you raise money reflects how you run your business. Therefore, put effort in the business plan and execute well
• A typical investment would be ~$5M at a ~%5M pre-money valuation (i.e., ~50% equity)
• The entrepreneurs should be as close as possible to the target market
• Trends: He thinks the following markets are growing (and Atlas in interested in them): video, virtual reality (environments or goods), everything local, consumer oriended products that are easy to get product validation and consumer feedback without waiting 2 years to develop the product

A big difference between now and the 90s is that:

• In the 90s you used to have 3 rounds: round A to build a product, round B to build a sales force and round C to scale.
• Now, after round A, you already throw your beta product to the market.

We asked about the differences between serial and first time entrepreneurs. He thinks that the term sheets are similar but the time to raise funding is longer. First time entrepreneurs need more time to prove themselves and build a team.

Eric is really involved with the MIT entrepreneurial ecosystem (judge and sponsor of the 100K, etc.) and him and Peter nicely said that we could contact them to have a coffee and ask for advice about any business idea or business plan that we have in mind.