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  • Want VC Funding: These Are the Rules

    To bring an idea to fruition, Cohen reminded the audience of the importance of evaluating various types of risk: the size of the market, the potential for market penetration, the ability to secure financing, adequate technology development, and an assessment of barriers presented by the competition.

    In 22 years of working with venture capitalists, Steven M. Cohen, co-manager of Morgan Lewis’s emerging business and technology practice, can only remember one time when a venture capitalist returned feedback to a presenter and ultimately invested. When the odds are that slim, “how do you get that first meeting and give yourself the best shot at getting a potential investor?” he asked.

    Cohen moderated a panel titled, “VC Confessionals: Why We Funded, Why We Passed,” during Wharton’s recent 2012 Entrepreneurship Conference, whose theme was “Turning Painpoints into Opportunity”. In explaining that tagline, the conference organizers noted that “pain has often been embedded in entrepreneurship. The pain of a personal frustration inspired a new venture. The pain, sweat and tears of an idea turned it into a viable business. The growing pains of the startup helped it morph from being in a league of its own, to one in which it became an industry leader. Pain has often revealed opportunity.”

    Perspiration has helped, too. As conference panelist Gil Beyda, founder and managing partner of Genacast Ventures, a venture capital firm in partnership with Comcast Ventures, noted: “I like to paraphrase Thomas Edison, who said that genius is 1% inspiration and 99% perspiration. To me, a startup is 1% a good idea and 99% perspiration and execution.” According to Beyda, while millions of people have good ideas, it is not about the idea; it’s about the execution.

    Gauging the Risks

    To bring an idea to fruition, Cohen reminded the audience of the importance of evaluating various types of risk: the size of the market, the potential for market penetration, the ability to secure financing, adequate technology development, and an assessment of barriers presented by the competition.

    All risks are not equal, said venture capitalist Josh Kopelman, who has helped found many companies, including Half.com, Infonautics and TurnTide. As a seed stage firm, his current company funds prelaunch concepts. “We bet on the team,” he said. “The bulk of what you are selling in your first pitch is yourself. The investor has to have confidence in you and in your ideas.” Then Kopelman looks at the product and its market through the “lens of the entrepreneur … how you prioritized your key decisions.”

    Read Full Article in Knowledge@Wharton.com

    Good luck.

    Calvin Wilson
    Founder and CEO
    Upstart: Business and Management for 20-40 Year Old Professionals
    calvin.wilson1@verizon.net
    http://twitter.com/Upstart__Nation

    Filed Under: Startup/Entrepreneur

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