Yesterday Atlas Venture invited 10 MIT students involved in entrepreneurship to a dinner in a private room at the Kendall Hotel with Sam Schaevitz, the founder of Lilliputian, and 2 partners of Atlas (including Jeff Andrews, founding investor of Lilliputiam). The objective of the dinner was to have an interactive discussion on new ideas, new opportunities and new challenges.
Lilliputian has developed a Mobile Power System, based on miniature fuel cell technology, which provides portable power to mobile devices. Currently it carries 5 times more energy than a normal battery. Nowadays there are about 15 million people in the US buying $15 rechargers that can be used only once! Lilliputian's device (the size of a cassette with a USB output) can be easily recharged and with each charge it can provide energy for 15 iPhone battery charges. Sam dropped his PhD at MIT in 2001 to start the company. They got funding in 2002 and they plan to go into commercialization in 2010. Currently there are ~35 employees and so far have raised ~$60M in funding.
Atlas Venture has $2.5 billion under management and just closed a new fund in December 2009. Since 1980 they have helped build >300 companies and since 1995, ~50 investments have been acquired and >40 have gone public with an aggregate market cap of >$20 billion.
Sam and Jeff shared some of their experiences as entrepreneur and investor:
- "Competition you can beat is a very good thing": it proves that people are buying, there is a market, etc
- First rule for VCs: "don't do something that requires change in user behavior "
- Sam: "I started this company because I wanted to start a company and it was the best thing at my hand where I could add value"
- In a startup, you need one captain to lead the ship (although a captain with whom you can disagree or fight).
- Don't give titles early on to employees and then degrade them. People take it personally.
- The business opportunity in the personal power/battery space back in 2002 still exists: there is a big gap between what people get and what people need. And the gap is growing!
- Ideas change over time. The current product has probably only 2% of the initial technology.
- The amount of work between something that works and something that you can put in front of the customer and he buys, it, is amazing!
- "VCs are not making investments in 2009 although nobody will tell you they are out of the market. So watch out. Raising funding could be a waste of time" (although he added that Atlas is investing). The reason is that they cannot raise funds because pension funds have lost a lot of money in stock and their portfolio is overweighted with VC investments (they need to compensate)
- Relations with investors are a long way. Don't break up things from the beginning.
- The right size for a top tier VC fund is ~$300M. If it is too big (e.g., $1B) it is difficult to invest responsible. If it is too small (e.g., <$100M), it is for a reason.
- Below a picture of Sam telling his story.
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