By guest authors Irina Patterson and Candice Arnold
Irina: What are other important factors for you when you make your decision about any particular entrepreneur?
Anu: One of the biggest factors is, Is this something you’ve done before? Are you someone who’s worked at Oracle and is now doing a database company? Do you know the space very, very well?
Other factors are, When you see the team, are are they hard working? Are they taking salary cuts and taking risks? Are they putting their own money into play? What are they willing to do to make this company succeed and return you an investment on your money?
Irina: Do you invest in entrepreneurs right out of school?
Anu: I think it’s harder. We have gone pretty far in deals, but haven’t written checks for those types of deals. I have written a check for somebody who has [come right out of school], individually. But with Sand Hill, as a group, that’s one of the advantages and disadvantages, you have a group thought and the group thought will most probably take you away from the high-risk situations.
Irina: What about entrepreneurs’ character traits?
Anu: In the end, it’s do they look like they’re going to be successful and be a big business? Are they driven, are they aggressive, do they understand business sense? Can they build a team? Do they take feedback well or not? And are they willing to be flexible as things change?
Irina: What do you offer to entrepreneurs you don’t invest in?
Anu: We give them a lot of feedback. The process at Sand Hill is we’re very open in sharing a lot of our information. We get that a lot from people who’ve gone through: they’ll say they didn’t like it, but they learned a lot. We’ll ask lots of tough questions. That’s all we can do. Every entrepreneur needs to look at that process of talking to many, many people, and they’ll learn something from every presentation they make.
Irina: Do you refer entrepreneurs you don’t invest in to anybody else?
Anu: It’s hard to refer them to other people unless I know the specific reason [why] we said no, because the next person will ask, “Why didn’t you invest?” So, it’s an odd thing to refer them to another investor unless it’s, for example, a clean tech deal that requires $15 million; we can’t write that big of a check, but someone else might. You have to have clear knowledge that meets some criteria that we would say no to, but they would say yes to.
Irina: Do you refer them to anywhere for more education?
Anu: There’s a lot of education out there, especially in Silicon Valley. Education isn’t the point. I would say there are different ways you can get funding, not just VC or angel, and that entrepreneurs should seek them out. I will do intros, or say, “Hey, talk to this company. Talk to that person.” But there’s only so much I can do, too. I have limited time. I run my own company, I’m the president of this angel group, I’m on the board of a foundation. I’m a busy guy, that’s life.
There’s a lot of information now on the Internet. People from other countries and other places have access to all the information. They read enough blogs and get involved in conversations on Twitter or whatever else. There’s so much information; that’s not the issue.
I think the issue is for the entrepreneur to be able to digest this all and learn. That’s the goal of any entrepreneur because entrepreneurs get advice from everybody. Even from investors who will say, “Don’t do this. Do that.” The goal of the entrepreneur is to weed through all that and figure out the advice that’s good and who he or she can trust and relate to.
The other thing I always tell all entrepreneurs is first build an advisory board of people whom you trust and whom you can ask advice from. And go to them and ask them what you should be doing and working on.
If people aren’t willing to spend money, they can spend time. It’s free. Give them equity or some sense of ownership, meet them every so often, and use them as a brainstorming tool to guide you in the right direction.