What types of startups are getting funded in the Silicon Valley?

The Silicon Valley Association of Startup Entrepreneurs – SVASE - organized an event to explore the current trends of venture capital investments in the Silicon Valley. The event was sold out three days in advance.

Date: 2008 August 7th – 6pm
Location: Wilson Sonsini Goodrich & Rosati in Palo Alto – one of the premier legal firms to technology and growth enterprises
Participants: 130 in attendance, most of them entrepreneurs, and a panel of 4 investors:

1. John C. Occhipinti, Managing Director, Woodside Fund
2. Carol Sands, Founder and Managing Member, The Halo Funds
3. Daniel Joensen, Deal Screening Committee, Band of Angels
4. Anthony Lee, General Partner, Altos Ventures

All four investors seemed to be actively investing in early stage of high tech companies. Anthony Lee stated that he closed three deals during the last week!

Main conclusions:
Hot Sectors: although investors do not usually specialize in one sector or stage of investments, “it seems green is the hot sector now”.
The Team: -better than an individual founder- they have to be passionate, enthusiastic, committed, motivated, realistic, and have specialized technical knowledge and business experience –even failed experiences are positive. “the failure makes the entrepreneur trustworthy”
Screening and Investment Period: an average of 6-8 months are required.
International investments:
- Growing international investments; It is typically required for the invested companies to open a location in the Valley.
- VC’s look for partnerships in the US and in also in other countries.
Protection of Ideas: investors are not going to “steal” opportunities, so entrepreneurs do not have to be afraid of sharing their idea.

Tips for Entrepreneurs:
Have the exit strategy in mind: the investors are looking for huge returns so they want to know about the exit strategies from the very beginning.
Aim for the key investors: do not waste time meeting all the investors. Identify the ones which will be interested in your technology, sector, stage, business model,…
The Venture Capital Data Base -http://www.punctuative.com/vcdb/- can help you to identify your key investors.
Meet high quality lawyers: they know all investors and are well connected. They will give you good advice about the key investors for your idea. Frequently they do it informally for free!
Meet the companies in the portfolio of your key investors: they will tell you what this investor is like.
Power Point presentations: should start with:
1. What is the problem?
2. What is the solution?
3. Why should the investor invest in your idea?
4. Include a case of a customer whose problem has already been solved.
Look for other financing sources: angel investors, banks, government grants, incubators, corporate ventures…

A priori it does not seem difficult. Silicon Valley attracts a lot of investors, but also a lot of entrepreneurs. Identifying the key potential investors for your business idea seems to be the key strategy.