Final Project–Advice for Seniors Interested in Entrepreneurship – by “George O – YLT2012”

Our final projected consisted of interviewing four professionals, two in the start-up industry and two in Venture Capital. We interviewed them over Skype and recorded our interviews to get some answers to the top questions seniors ask about startups. We wanted to get some great advice from people who have been in our shoes and see how they would respond to the job market today. We compiled these valuable interviews into one youtube video that will be made public once we obtain permission to release the footage from all four interviewees. For now though, we leave you with a summary of our findings, a brief overview of the venture capital industry, and some biography entries on our interviewees.

—George Ortega, Sharon Ji, and Eric Li

 

1. What advice do you have for seniors who are interested in startups?

 

Seniors should join startups if they’re committed to learning in a small and challenging environment. Christiaan Vorkink urges seniors to join startups that are working to address a problem that means a lot to them given the intensity of work they could expect in a small startup environment that is constrained with few labor and financial resources.

 

As for seniors interested in venture capital, Yanev Suissa from NEA says there are three main ways to get into the industry: 1) work for a technology investment bank or technology investment banking group, 2) work for a buyer of startups, like Google or Amazon, or 3) work in a startup either as the entrepreneur or early-stage employee.

 

 

2. What if these seniors do not have the technical skills?

 

Joining startups without technical skills was unanimously judged to be difficult but certainly possible according to our interviewees. Stuart Wall urges non-technical entrepreneurs to find a technical co-founder and divide the equity stake equally since the technical aspects of a business are just as important as the marketing and product design elements a non-technical person would be in charge of. Christiaan suggests that seniors look for startups that need what you have to offer. If you’re non-technical, for example, a small startup that is seeking to build a prototype may not be the best option. If there is a product already created, as in a more developed startup, there is likely to be a need for your skillset as a liberal arts major. You can handle business development or become responsible for maintaining relationships with investors and customers. As Yanev Suissa sums it up, technical entrepreneurs are great and important, but they often don’t know how to build products and companies. That’s where you can come in to help.

 

 

3. Does consulting or banking prepare you for startups or venture capital?

 

While Ka Mo Lau didn’t think consulting or banking prepared entrepreneurs to become adaptive, Stuart Wall said his consulting experience had some transferrable skills, like a strong work ethic and sharp analytical skills. Yanev Suissa recognizes the importance of these two career paths but does point out that consulting and banking usually involve busywork, as younger associates are often “cogs in a machine.” Christiaan thinks that people should follow their main passions, whether that is consulting or starting a company. You should not postpone your plans because you want to get experience first. As both the venture capitalists and entrepreneurs attest to, the best preparatory experience for being a successful entrepreneur is being a failed entrepreneur before that and learning from your past mistakes.

 

 

4.  What are common characteristics of young entrepreneurs?

 

The main common characteristics mentioned were persistence, action-oriented, passionate, adaptive, and tenacious. Entrepreneurs need to be completely committed to their companies and never take no for an answer. As Stuart Wall says, obstacles like getting no investor money or having an employee quit make the journey more difficult, but entrepreneurs need to have the crazy idea and faith that their business will still become successful. Having said that, having faith is not the same as leading blind when your idea no longer makes sense. Yanev Suissa stresses that the best entrepreneurs can pivot quickly to a dynamic environment in order to maximize their opportunities and grow their businesses the most possible.

 

 

5.   What’s the next big idea?

 

The next big idea is what’s on everyone’s mind right now. Answers ranged from data analytics to education technology to payment processing to healthcare technologies. The most common answer was healthcare technology given that disruption in this area has been limited due to new legislation that has steered some innovators away. Christiaan Vorkink explains soon we will hopefully see a new healthcare system where a world of applications, services, and products will be designed to help people recover more quickly and live better and longer.

 

—————————————————————————————————————-

Here are some facts to put things in perspective in the VC industry. Below are information from a HBS case study on venture capital: 

–       Venture capital investing is a “hits” business, with a majority of the reward coming from a relative small number of spectacular success

Payoff Count Total Cost % of Cost Value % of Value Average Payoff
<1X

57

3,448,675

44.3%

497,695

0.8%

0.1

 
1X to 3X

37

2,279,905

29.3%

3,302,817

5.1%

1.4

 
3X to 6X

13

939,075

12.1%

4,112,715

6.3%

4.4

 
6X to 10X

3

189,991

2.4%

1,689,378

2.6%

8.9

 
>10X

17

928,830

11.9%

55,287,017

85.2%

59.5

 
 

127

7,786,476

100.0%

64,889,622

100.0%

8.3

 
Source: HBS Case study on risk and rewards in VC      

 

–       Returns on venture capital investments (individual deals with funds) are highest when market “over-value” individual companies over sectors, with the best examples being the Internet-stock bubble in 1999-earliy 2000

–       Through returns to VCs have been low, the industry has been disproportionately responsible for creating some of the most important companies

  • E.g. Federal Express, Google, Genentech and Apple

–       The industry is very cyclical. Sometime it’s easier to start an internet company than others. It was great in 2000, as shown below.

  • Source: HBS case study, NVCA 2010

–       We are back in a internet investment height again right now. Should you be an entrepreneur and join the ride?

 

Biographies

 

Ka Mo Lau, Paper G, CFO and Co-Founder

Ka Mo Lau is the cofounder and Chief Financial Officer of PaperG, an advertising technology company recently named one of Forbes’ 100 Most Promising Companies in America. Prior to PaperG, he spent time as an investment banker at Credit Suisse, as a consultant at IBM. He holds a BA in Economics from Yale University, and is a fellow of the Yale Entrepreneurial Institute. During his time as an undergraduate, he also served as the Executive Director of the Elmseed Enterprise Fund, the oldest student-run microlending organization in America.

(Source: Taken from YEI Institute)

 

Stuart Wall, SignPost, CEO and Founder

Stuart Wall is the founder and CEO of Signpost, a local advertising platform funded by Spark Capital and Google Ventures. Signpost is working to create the AdSense of local commerce and currently powers monetization campaigns for over 1,200 publishers. Stuart developed the concept while in business school at Harvard University and led the company through bootstrapped product development and initial fund raising. Stuart was previously a consultant in the Private Equity Group at Bain & Company where he provided strategic advice for large buyout funds.

(Source: Taken from Huffington Post)

 

Yanev Suissa, Venture Capital Investor, NEA

Yanev joined NEA officially in 2010, having worked with the firm since 2009. He currently works with the boards of Solidfire, Bridge International Academies, Bandgap Engineering, and Boulder Wind Power for NEA.  In the tech space, Yanev focuses on earlier stage investments, including enterprise and cloud solutions, digital media, and consumer technologies. In the energy space, Yanev focuses on both supply and demand side solutions across all renewable technologies while simultaneously providing regular advice to energy companies within NEA’s portfolio.

Prior to joining NEA, Yanev was a Senior Investment Officer with the Department of Energy’s Loan Guarantee Program, where he helped form the group back in 2007. At the Department of Energy, Yanev was engaged in the underwriting of billions of dollars of debt for issuance to companies spanning all sectors within the energy technology industry. Prior to joining the DOE, Yanev served as a consultant working with a range of leading financial industry clients to assess growth opportunities. He also worked as an advisor to several successful startups around the world.
Yanev serves on the board of NYCVC, a group dedicated to building relationships and facilitating interaction among the next generation of New York venture capitalists.   He is also the recipient of a series of fellowships, including the Kauffman Fellowship, the Presidential Management Fellowship, the Heymann Fellowship, the Kennedy Fellowship, and the Cravath Fellowship.

Yanev earned an MBA with distinction from the Oxford Said School of Business (Christ Church), a JD from Harvard Law School, and a Master’s degree  from Sydney Law School.  He graduated magna cum laude and Phi Beta Kappa from Yale University, receiving his BA in Ethics, Politics & Economics and Sociology.

(Source: Taken from NEA)

 

Christiaan Vorkink,

Christiaan joined True Ventures in 2008 after spending eight years working in and around early stage technology companies. His first foray into entrepreneurship came in elementary school when he and his best friend managed the largest downtown newspaper delivery service in the small town in New Hampshire where they grew up. After graduating college, he taught history for two years in suburban New York before moving to Boston to work in a variety of roles in support of local startups and in finance. Prior to joining True, Christiaan was a senior analyst in the venture capital research group at Cambridge Associates and worked in network development at BrightRoll, a True portfolio company.

 

Outside the office, Christiaan is an enthusiastic consumer of Mexican food, an aspiring urban gardener and an avid supporter of all but one of Boston’s four major professional sports teams. He is a graduate of Yale and MIT. Christiaan also serves on the board of directors of YMCA Camp Belknap, a summer camp for boys that he attended and worked at for a dozen years as a child and young adult.

 

(Source: Taken from True Ventures)

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