What tech firms do VCs choose to invest in?

Interview with Ramana Jampala at SAS Investors, 2006, Columbia Business School

Who will VCs choose to work with?

Good Teams 
Assessing the team is often more important than the business thesis itself. It is standard for investors to place heavy merit on the value of the management team they are reviewing. Relevant industry experience is critical but some investors feel that they are not truly comfortable with the team unless they have specific experience successfully running a similar early-staged company in the same sector, even going to far as to seek out entrepreneurs with established track records looking for a 2nd home run.

Good Technologies
It is interesting also to note how important qualitative factors have become in screening management teams. Mr. Jampala also noted that people seeking funding for their business should appear dedicated and “hungry” to succeed. This is what compels investors to put their money and faith in potential management team. While this may not be a radical change in the industry it seems that investors are openly acknowledging the need to palpably feel the want to succeed from entrepreneurs. These factors equate a longer and more thorough due diligence cycle including background checks, in-depth industry analyses, and
also technical diligence involving IT auditors (once again, a case for Tech Due Diligence) to evaluate the efficacy of products/technologies. This is even more the case with an experienced VC firm that learned from past mistakes and seeks to eliminate those pitfalls in any future deals they are involved in. The proper understanding of underlying technologies and their competitive advantage are a critical edge for any VC looking beyond the market size.

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