LM          When I started Marcus Venture Consulting two years ago, there really weren’t any early stage funds for the high tech sector.  There were a lot of entrepreneurs out there, and there was money available, but it wasn’t really designed for their specific situation and markets.  On the other side, there were venture capital funds that didn’t know how to find or work with the entrepreneurs.

               But even if they did find each other, they really didn’t speak the same language.  If the early stage companies knew how to present themselves in venture capital speak and knew how to build companies, they could get the money.  But those were skills they often didn’t have access to.  At the same time, there were venture capital funds and institutions that wanted to get involved in the tech sector but lacked an understanding of the markets and the possibilities.  My approach was to build a bridge between the two.

 IMIS       What advice would you give to entrepreneurs in the high tech sector hoping to access venture capital funding?

 LM          Know your business, know the venture capitalist, and know the how the two can benefit one another.

              One of the first things entrepreneurs forget is that ultimately, venture capital is about return on investment.  I remember earlier last year when venture capitalists were giving out money left, right and centre and the comment was ‘Oh, they are behaving just like the American VC’s, they are giving out money as if one venture in ten will be successful’.  And each entrepreneur who was a beneficiary thought that they would be the ‘one’ and all the rest would be the nine. Now that many of them are in trouble, they blame the VC’s for walking away.  But that’s venture capital – it’s not banking and it’s not an allowance.  You’ve got to produce something for them to invest in and you’ve got to hit real business targets upon which success can be judged.

              To increase your chances of success in attracting a venture capitalist, you need to do your homework.  You would investigate a potential partner in the business pretty carefully, so why not your venture capitalist?  Does it make sense to send your business plan to a venture capitalist if you have never bothered to look at his portfolio?  How can you expect him to understand your business and support it through the rough times, if he has no expertise in your market area?

              And then there’s the issue of valuing your business.  How many times has a venture capitalist asked an entrepreneur what value they put on their business, only to hear ‘Well, what do you think?’.  Do you do that when you’re trying to sell your house?  Do you do that when you’re trying to sell a rug?  Probably not.  So why do that when you’re trying to sell your company?  Do your groundwork, understand what the real worth of your company is at that time in that market, and know what you are willing and able to negotiate.

IMIS        There is a lot of talk about the ‘new’ versus the ‘old’ economies.  What is your perspective on this from the venture capital sector?

LM            I think the ‘new’ economy is a false premise.  After years of hype about the new economy, we’re finally seeing that the business principles from the old economy are just as valid today.  The idea of trying to build in a year a company that is the same size as one that took 20 years to grow – why did anyone think that would work?  Sometimes there is a reason why things need to take as long as they do – economic reasons, cultural reasons, human resource reasons.  In many ways we’ve been setting ourselves up to fail because our expectations were so high and not always realistic.  This is particularly a problem for the financiers who don’t have a full and realistic grasp of the market, and whose expectations for a short term gain can lead them to withdraw support prematurely.

IMIS        What other issues do you see on the horizon for venture capitalists looking at the high tech sector in the 21^st century?

LM          The VC industry is a very competitive landscape right now.  There are a lot of VC funds.  Many of them were started only a year ago and already they are becoming a bit wayward.  They founder for several reasons.   Some funds have been started by people who aren’t professional venture capitalists, and they don’t understand the risks involved or may not have the tolerance to stay the down times.  Some funds are started by venture capitalists who don’t understand the technology field as fully as they need in order to be successful.  And then there are the old, established venture capitalists who understand venture capital, but may not have access to technical expertise or the best deal flow. 

To give you an idea of how many opportunities there are out there, during a period of several months last year, Marcus Venture Consulting was receiving upwards of 300 business plans a month.  Even now we are seeing some great plans with a lot of potential, so the activity is there, but the VC’s don’t always know how to access it.

               Another problem is that many of the VC’s and corporate venturing arms looking at this sector haven’t defined a clear mandate for themselves.  They present themselves broadly as a “technology fund” when it would be wiser to focus on a particular vertical niche, such as biotechnology or communications.  With this type of focus, the fund is in a position to develop a body of expertise that can add real value.

               And finally, remember that hard data on such a new industry or category of the market is going to be extremely difficult to get.  Often the data available from analyst organisations is compiled from the same companies that are seeking the investment.  So a healthy sense of intuition and a strong sense of the markets themselves are often required. 

IMIS        You have been quite a champion of supporting women in their careers.  Can you tell us what inspired you to set up HighTech Women?

LM          Throughout my education and working life, I have met and worked with many women who have been brilliant role models and mentors to me.  For them, mentoring is about having the satisfaction of contributing to the success of the people you mentor and knowing that they will mentor others in turn.

              I feel very strongly about giving back some of what I have experienced.  After I set up Marcus Venture Consulting, I wanted to create a group that would bring together women at all stages in their careers and from all areas that relate to the tech sector.  I sent out an e-mail on a Sunday evening to 100 colleagues I knew, and they sent it on to all their friends.  By the Wednesday we had over 1,000 hits, and HighTech Women was on its way.

IMIS        What do you see as the key to supporting women in their careers?

LM           It really comes down to leadership.  It’s the leadership of an organisation that sets the tone for how safe it is for any employee, not just the women, to be themselves and succeed.  If you can’t be yourself at work, how can you give of all of your skills and talents, how can you contribute fully to the organisation?

              The other aspect is personal leadership.  That is a blend of confidence, assertiveness and sensitivity, so that you can set your boundaries with colleagues in a non-aggressive way.  So, for instance, I once had a male colleague drop some of his papers on my desk to be faxed.  I returned them to him, saying he must have left them on my desk by mistake, that I wasn’t the one to be sending the fax.  He tried to dump them on me again, but I held my ground.  In the end, we both understood each other better and were able to work together constructively, but it took years for me to learn how to do that.

              Those are the sorts of things that I think a mentoring group can help the women just starting on their careers to learn.  It’s about having the confidence to be yourself and knowing that you can make a significant contribution to our world.

Quotes:    “One of the best things about being successful in business has been that it’s given me a platform to be able to talk about things that are important to me.”

               “The venture capital industry is a very competitive landscape right now.” 

               “One of the first things entrepreneurs always forget is that venture capital is about return on investment.”