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The DEMO Dating Game
Adam Lashinsky of Fortune Magazine has a piece on DEMO that is worth reading.
He really captures the pulse of the event.
I tried to blog my DEMO experience and posted a bunch of times while I was there.
Clearly there was a lot of the dating game going on. Guy Kawaski's quote in Adam's story is the most memorable:
"It's a great event, especially if you understand the dance that's going on: entrepreneurs acting like they don't need capital, and venture capitalists acting like they don't need entrepreneurs," says venture capitalist Guy Kawasaki. Participants' behavior at Demo, he says, is a bit like "acting prudish in a brothel."
But for me, it wasn't so much about finding a company to invest in as it was a great way to see "the market" in a couple days. Chris Shipley does a great job of assembling a group of companies that are very representative of the most exciting new areas for investment and you can really get a feel for what's happening by spending a couple days at DEMO.
Another notable quote in Adam's story comes from Tom Shields at Woodside Fund who said:
"A lot of these companies could get picked up by Yahoo for $30 million, a huge success for the entrepreneur," says Tom Shields of Woodside Fund. Selling a company for only $30 million, says Shields, "would be a huge failure for me."
I understand that comment having lived through that exact experience recently with Delicious. But we view Delicious as a great success, not a huge failure, and I think the venture business needs to figure out how to make an entrepreneurs' successes their own. If there's a will, there's a way.
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Posted March 1, 2006 in Venture Capital and TechnologyComments
I'm an entrepreneur on my second startup. My first was sold for a "low" valuation as described above, so was a great success for me and my co-founder, and we provided a good return for our friends and family investors. For this next one, we're looking at VC money, but I think the issue you bring up at the end of this column is exactly what scares me about it. You've touched on this thread in a few different ways, but I'm still not seeing any solutions. The advisory capital thing is good, but not realistic - there just aren't many really good people in that space. I'd say the majority of experienced entrepreneurs that I speak to are doing everything they can to avoid VC money, with control and exit options being a huge reason. I think the person that cracks the nut of aligning VC interests with those of the entrepreneurs stands to gain a LOT.
Posted by: Chris Neumann | Mar 1, 2006 6:27:04 PM
" I think the venture business needs to figure out how to make an entrepreneurs' successes their own." - I doubt if that can happen, given the different interests.
Can we say, it can never happen, exceptions being an 'irrational' IPO or a 'wow' takeover?
Posted by: Srinivasan | Mar 1, 2006 8:25:58 PM
VC’s need to allow entrepreneurs to cash out some of their equity by giving them an option to sell their shares, a put to be exact. So if yahoo/google/etc comes calling the entrepreneurs can exercise their puts. The put can have all kinds of strings attached and some calculated way of figuring out the strike price. It may also trigger another round of funding.
Posted by: Dean Fragnito | Mar 2, 2006 10:40:45 AM
Demo was fun and terrifying for us last year. The presentation really has to work, and while it did, it's grueling getting it together. What was interesting about last year vs this year is that this year is so much more hyped--very few companies got substantial buzz or coverage. This year, News.com frontpaged it almost daily.
The most interesting connections for us were partner opportunities, not venture. We needed it less then, but even so, I think the industry wasn't chasing deals like it is presently.
Posted by: charlie crystle | Mar 3, 2006 6:52:52 AM
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