Wisdom from a Jelly Talk: Funding Options

As part of  Mass Innovation Nights, we get the chance to hear presentations from lots of different interesting people and some events have more interesting names than others.(Side note: Although this column is obviously of interest to entrepreneurs and start-ups, Mass Innovation Nights is for everyone.  Big company, little company, medium-sized company.  In fact, we’ve noticed that we get a lot of small companies and a few very very large companies, but where are the mid-sized companies when it comes to exhibiting at Mass Innovation Nights?  Hmmm?)

So, what is Jelly?  Jelly is a casual work networking event or co-working arrangement.  Last week we went to a Jelly Talk, appropriately enough, at the TechStars Cambridge home in Central Square.  (TechStars was started in Colorado and is a mentorship-driven summer program designed to support very early stage companies.)  According to Executive Director Shawn Broderick, there are 21 founders and 65 mentors working on 9 TechStar companies in Cambridge this summer (out of 300 applications).  Watch for the opportunity to apply for 2010 after the first of the year.

Shawn shared the floor with Bijan Sabet from Spark Capital and the topic was early stage funding options.  The room was full and more questions came from online “Jellies” tuned in around the world.  Questions ranged from the “What kind of deal flow are you seeing?” to “What kind of advice would you give early stage applications?”  Here are some words of wisdom from the speakers:

• When asked about the relative importance of users versus a business model, Bijan fell on the side of  “user engagement.”  He’d rather see big numbers and cited Facebook.  He’d rather see scale.

• Shawn says “TechStar invests in teams.”  He wants to see founders who “execute like madmen, or madwomen.”  He emphasized this by saying, if you are in the TechStars program, “you are here because of who you are, not your idea (and some in spite of the idea.)”  Shawn’s advice for early stage start-ups was focused on the team.  “Build a great team, teams capable of executing in 3 months.”

• Bijan wanted the audience to understand that VCs make thematic investments.  They are focused on specific industries.  He also named “user experience” or a great UI as one of the biggest gaps in what he sees.

Another question focused on the “when” of approaching investors.  “What is the right time to approach VCs?”

• For TechStars, it is hard to get too early.  They like very early stage companies.  Shawn says of other VCs,  “It is never too early in theory but it needs to be the right investor.”
• Bijan “would rather see a demo than a PowerPoint presentation.”

All-in-all, good info for start-ups considering their options with regards to funding.  What advice would YOU give start-ups with regard to funding options?