The most successful teams and ventures demonstrate passion and the ability to solve problems and create solid business plans, Roizen says. Yet, they were not in it to get wealthy. The strength of the team was their cohesiveness, she says.
Roizen talks about the importance of customers. She shares a story where an entrepreneur identified a problem, took time to develop a solution, and got real customers to pay him to make the product.
Timing is everything when starting a company, Roizen says. Mobius raised their money in a good time and now have a lot of gas in the tank, she notes. Some companies needed money in June 2001 when people were not answering phone calls. She considers this an example of bad timing.
Roizen thinks that one of the biggest mistakes companies made in their hayday was considering VC money as their own. Entrepreneurs forgot they had to pay back their investments. If there is any value that gets created as a result of the entrepreneurs sweat and VC money, she says, then the VC's get the money back first.
Roizen notes some of the opportunities available for up-and-coming entrepreneurs:
1) There is still a tremendous amount of capital. Mobius, in 2002, had $500 M - $8 M left to invest in one fund,
2) There is rationality for the market with respect to hiring, office space and expectations of people to work with,
3) Company valuations are still pretty high,
4) Collaborative efforts between entrepreneurs and VCs, and VCs with other VCs, are strong
5) Working with a VC is the one time in your life you have someone working for you and paying you at the same time.
It is important that the startup team have experience - a combination of grey hair and youth is good, says Roizen. VC's have learned that it is not wise to fund a team with only college students, but older people cannot get funding without youth. VC's are looking for a technology to exploit with a team of individuals comprised of young and experienced members.
Heidi Roizen, managing director for Mobius Venture Capital, explains that Mobius Venture Capital has $1.5 B under management in current fund, $1 B in prior fund, and 100 active portfolio companies. There are ten VCs at Mobius who invest mostly in software, communication, wireless, next generation and web services, she says.
Roizen provides tips for giving good pitches. First, focus on getting to the next step. The day you come in for an hour-long meeting, she says, plan on a 20 min. presentation (no more); get to the value proposition in 5 minutes; be articulate; manage the meeting; show experience and establish credibility.
Roizen believes that in the VC business, most companies fail. Therefore, the rare successes of their portfolio companies has to be big. Often you hear 10X, i.e. you should see 10 times your capital coming back, she says. It is also calculated as dollars in, dollars out, or internaI rate of return (IRR). The Mobius fund today has an IRR of 90%. Roizen notes you will almost never hear a VC use IRR.