More investing with Rudy Gadre

As I mentioned in my last post I’d have another one on Rudy. I won’t include this in my Investing Lessons from Venture Capitalist series as there are a lot of random thoughts in here as Rudy wrapped up and we got into Q & A. The first one relating to how much money are the entrepreneurs raising, is it enough? Will they be able to turn this pile of cash into enough traction and progress that the next investor will want to make an investment at a higher valuation? The conversation goes a little deeper here as it begins to get into investing terms and what terms are good for the current and future investors as well as the entrepreneur. Rudy didn’t dig deep into term sheets (although a later workshop I put on with Greg Gottesman on term sheets), but he definitely had a preference for terms that are less focused on dilution and more focused on doing whatever it took to move the company to the next level.

Then there was the Q & A, some of the notes were good enough and I put them here:

What would you avoid?

• Stay away from companies selling into cost centers
• Careful of companies who have to renew lots of customers

Does pedigree matter?

• Yes – it is a proxy for quality – unless someone can prove they are good otherwise
• Pedigree is a ticket to get in

How do you evaluate a good team?

• CEO – Charisma, Intellect, & Drive
  • Success is a reflection of the founder
• They want to hire the BEST – not just their friends

Of your best investments currently – what was the factor that you could attribute your investment decision to

• Evaluation of the team

Age of the team – college vs. other?

• B2C is easier for younger
• B2B – experience is better
• No real preference though

How much weight is put on exec staff with exits?

• Not much – really anyone can do it in consumer internet
• Enterprise – needs selling to enterprises