Seed Capital From Angel Investors: Manu Kumar, Founder and Chief Firestarter, K9 Ventures (Part 3)

By guest authors Irina Patterson and Ravi Bulusu

Irina: Do you think in terms of valuation when you invest in a company?

Manu: Yes, I do look at valuation, and I definitely want to be the first money going into a company. And because the initial investment amount is relatively small, I also want the valuation to be relatively low so that there is a meaningful participation in and stake in that company. So, I do look at valuation as part of the investment process. >>>

Seed Capital From Angel Investors: Manu Kumar, Founder And Chief Firestarter, K9 Ventures (Part 2)

By guest authors Irina Patterson and Ravi Bulusu

Irina: How many pitches do you receive every month?

Manu: It is something that I want to track, but I have not had the time to do it yet. If I were to guess, I would say somewhere around fifty to sixty a month, and that includes presentations at events, pitches that come in directly over e-mail, and those that come through referrals.

Irina: Out of all of those pitches, how many deserve a closer look?

Manu: I would say probably about five or ten a month deserve a deeper look or at least a first or a second meeting. If I look at my statistics from last year, I looked at almost 500 ideas and ended up doing five investments last year. >>>

Seed Capital From Angel Investors: Manu Kumar, Founder And Chief Firestarter, K9 Ventures (Part 1)

By guest authors Irina Patterson and Ravi Bulusu

This is the seventeenth interview in our series on financing for entrepreneurs. I am talking to Manu Kumar, the founder and chief firestarter at K9 Ventures, an early-stage venture fund that provides funding and support for concept-stage and seed-stage technology companies. It is based in Palo Alto, California.

Irina: Hi, Manu. Let’s start with your background.

Manu: I am an entrepreneur turned investor. I started my entrepreneurial career in the late 1990s while I was a grad student at Carnegie Mellon. I started my first company in 1996. That company was doing Web-based customer service. We built that company and sold it in 2000 to Epiphany. >>>

Seed Capital From Angel Investors: Ho Nam, General Partner, Altos Ventures (Part 7)

By guest authors Irina Patterson and Candice Arnold

Ho: Whenever we turn down companies, they always ask whether we can refer them to other investors. Sometimes the company would be better suited for certain investors who we might know and if there is a fit, we’ll refer them.

But in general, we don’t like getting referrals of companies that other people have rejected, unless they know that this particular company might fit our strategy and they know us well and they think it’s a good match. Certainly, we’ll take those referrals. But if it’s just a random referral . . .  if somebody kept referring us deals like that that were not highly qualified for us, that relationship would not be a very good relationship and we would not pay attention to their next referral. >>>

Seed Capital From Angel Investors: Ho Nam, General Partner, Altos Ventures (Part 6)

By guest authors Irina Patterson and Candice Arnold

Irina: When they come to you, should they have a complete team?

Ho: It is usually two or three people, but we have backed single founders before.

Irina: What’s the most important character trait a founder can have that will clinch the deal?

Ho: One word that comes up a lot is scrappy. A scrappy founder, somebody who is very really resilient, won’t give up and is very resourceful. Scrappiness – I think is a sign of real resourcefulness. Of course, you’ve read our blog post on hedgehogs and foxes. Hedgehogs capture the essence of the kinds of entrepreneurs that we like. There are lots of different types of great entrepreneurs, but we tend to like the hedgehog type. >>>

Seed Capital From Angel Investors: Ho Nam, General Partner, Altos Ventures (Part 5)

By guest authors Irina Patterson and Candice Arnold

Irina: Do you think about the total available market (TAM) when you invest?

Ho: That’s a good question. We talk about that a lot. We do, obviously, like large market opportunities, but we also have the philosophy that it’s really hard to predict what the next giant markets are going to be. >>>

Seed Capital From Angel Investors: Brad Feld, Managing Director, Foundry Group (Part 8)

By guest authors Irina Patterson and Candice Arnold

Irina: Could you compare TechStars to Y Combinator?

Brad: They are similar types of programs. Y Combinator was the first, TechStars was the second. The historical difference between the two programs has been that when TechStars was started, it was very much mentor driven. So, if you look at each of the cities, there are forty or fifty mentors who actively engage with the companies from the very beginning. It’s more than just a famous entrepreneur showing up giving a speech; instead, it’s real, deep engagement. >>>

Seed Capital From Angel Investors: Ho Nam, General Partner, Altos Ventures (Part 4)

By guest authors Irina Patterson and Candice Arnold

Ho: Certainly, dividends are one way, but you could also do shareholder buybacks. Public companies do this all the time. They do a stock buyback program if they think that their stock is relatively undervalued, or they think that’s a good use of capital. The board of directors can set the valuation for the offer to buy stock, or you have an independent third party set it. Any shareholder who wants to cash out can cash out. >>>