Visit to Charles River Ventures

As part of the Mass Tech Trek, I visited with a group of 8 Sloanies the offices of Charles River Ventures, an early stage venture capital firm. Austin Westerling, partner, hosted our visit.

Since its foundation, Charles River Ventures has raised 13 funds totaling $2.2B. Some of the companies they invested in the past include Ciena, Flarion, Cascade, Sonus, Upromise, Netezza or Bigband. Their equity target is 15% to 30%: usually 10% initially and the rest over time.

Austin talked about the VC industry and CRV investment strategies:

• Pre-money valuation averages $7.1M among startups.
• Last year they invested in 10 ventures in the East coast and 10 ventures in the West coast. Rive Technology is among the companies they invested in last year. Its founder, Javier Garcia, has been named 2001 Young Innovator by Technology Review and he is from Alicante, Spain (like me).
• The typical things they look in a startup are (cliche): a) A team of missionaries, not mercenaries; obsessed with customers not competition; sense of urgency, yet patient; people that show success in whatever they do; passionate founders; commitment to technical excellence; understand market; b) large and growing market; clear market need; reasonable financing and clear business model;
• Venture back companies are growing in the NY region, in particular in the media, gaming, advertisement and consumer sectors.
• Charles River Ventures helps startups to acquire customers, partners and recruiting
• In terms of careers in VC, it is better to have an associate position in a tier 1 firm than a VP position in a tier 2, because the brand matters and it is possible to learn from other excellent people.

Charles River Ventures also has an interesting program called Quickstart. They invest up to $500K and only requires the approval of two partners so they could potentially make the decision in the same day.

A recommendation he gave to entrepreneurs "Entrepreneurs usually underestimate both the size of the market and the time to take off. Therefore, control the cash burn rate and you will make a lot of money"