The Silicon Slopes Tech Summit drew large crowds on its first day—particularly for a session on venture capital that was standing room only in a large auditorium at the Salt Palace Convention Center. The panelists, seasoned veterans in the VC community, traded war stories about major deals won and lost and offered advice for entrepreneurs.
The panel was moderated by David Hornik, general partner with August Capital. Hornik has focused his investments in software companies; some of his investments include Splunk, Evite, WePay and Bill.com. Despite those great successes, he bemoaned some of the great ones that got away—like Uber, which he passed on in its early days.
Those ups and downs notwithstanding, Hornik said entrepreneurship is a much harder gig than venture capital.
“Venture is a piece of cake compared to entrepreneurship. The fact that entrepreneurship ever works is completely miraculous,” he said. “One of the things that’s such a joy about this job is that you get to experience this magic where you have a few people, something interesting, and through a bunch of alchemy it turns into … companies that are hiring thousands of people, that are making lots of money, that are building things that are transforming the world. I think that’s amazing, but it’s also impossible. It’s an incredibly hard thing to do.”
For entrepreneurs, obtaining financial backing can seem like the hardest of all tasks. But Ben Dahl, partner at Pelion Capital, said the key to success is perseverance for entrepreneurs and venture capitalists alike. Part of being successful, he said, is not seeing a closed door or a declined meeting request as something that can’t be overcome.
“You have to think of them as obstacles that you can get over. I think people who are successful, both as entrepreneurs or as venture capitalists, are people who see those obstacles and figure out a way to get over them or around them,” he said.
Dafina Toncheva, partner with USVP, suggested that venture capital funding is just not for everyone.
“Not all businesses are venture backable businesses, and that’s OK,” she said. “Venture capital is only a very small portion of the type of investors that back businesses that grow into successful companies. … So before you launch your fundraising, think about who are the right types of investors and who your business will appeal to so you can have more productive conversations and so you can find the right partners who can help you build the type of business that you want.”
Rejection can also be an opportunity to learn and grow—and hone your business idea.
“Seek candor,” said Dahl. “Seek people who are willing to give you very blunt and sometimes difficult feedback about your ideas. Because by learning from that feedback or figuring out why that feedback is wrong or why that feedback is right, you get better. And your ideas get better over time. I think a lot of entrepreneurs have the belief that they’re going to shun the difficult conversations or shun the problems that [potential investors] see in their business. But I think the opposite is right—you need to spend time really focusing on the things that are difficult and the advice that’s hard to hear.”
Hornik agreed, adding, “It is amazing how often entrepreneurs get angry when you explain why you’re turning them down. ‘You misunderstood my business, or whatever.’ No, that’s incredible feedback.”
He said entrepreneurs should listen to feedback, even if they think it’s absolutely wrong, because that will help them strengthen their presentation the next time they have the opportunity to pitch to investors.
Jules Maltz, general partner at IVP, has invested in companies like Twitter, Dropbox, Slack, Nerdwallet and Zenefits. He said more companies should think big, right from the start.
“Snapchat was focused on disappearing messages for 16 year olds, and now it’s broader. Facebook was focused on college students and now it’s much broader,” he said. “They don’t actually start out saying, ‘I’m going to reach millions and millions of people.’ They start out saying, ‘I’m going to solve one specific problem.’ But then the entrepreneur goes, ‘But if I do that, can I extend that to more people in bigger markets?'”
That, said Maltz, is how great companies are made.