Guy Kawasaki on Venture Capital (pt 3)
Jun.08, 2009 in
Venture Capital Investor
Silicon Valley entrepreneur and venture capitalist, Guy Kawasaki, gave a speech at StartWorks, Silicon Valley in Spring 2008. This is part 1 in a 3-part series. (c) 2008 John Montgomery. Film by Expert In A Box.
June 8th, 2009 at 12:09 am
First of all, such a company will not go to the VC, because they will prefer to get a loan. Of course VC would like a “no risk” high potential investment, the problem is, usually entrepreneurs are not stupid.
June 8th, 2009 at 12:09 am
I’m an italian student in management engineering. I found this video really helpful to improve my view of venture capitalists’ needs and expectations, so I’ll try to use all these advices in a business plan. Thanks mr. Kawasaki.
June 8th, 2009 at 12:09 am
If working capital is the requirement, and the company in question has the clients/customers already at their door. And all they require is working capital to expand until the cash flow gap is filled, then the obvious choice is to take out a loan from the bank, since the security of return is higher and the percentage for the ROI to the bank is much lower than a VC (which normally likes to see 10 to 20 times the investment and even a stake in the company). Of course it’s a VCs dream come true
June 8th, 2009 at 12:09 am
To darianknight: actually, your assumption is not necessarily correct. Companies need *working capital* to bridge cash flow gaps until their revenues arrive, and thus arriving at a VC with a solid presentation of why working capital is needed can still make a proposition viable.
June 8th, 2009 at 12:09 am
I think all of the points he makes are spot on except the very last one. If a company comes to a VC and says “We need money because we have more customers than we can scale to match” that should actually be a red flag to VCs with common sense. It shows that the company involved has inadequate revenue generation projections to afford scaling versus the cost per user. In the long run, this may actually be more of a loss than a gain to the investor.
June 8th, 2009 at 12:09 am
5 Stars!! Absolutely love this video!!