In the second installment of the VC Speaker Series held at the Cove @ UCI, sponsored by Knobbe Martens and TriNet, Tyson Clark, partner at GV (formerly Google Ventures), shared his perspective on the changing landscape for startups and venture capital. Clark’s perspective is informed by his experience as a partner at GV as well as his prior business roles. He has led acquisitions in the enterprise software-as-a-service (SaaS) space for Oracle’s corporate development group and, at Morgan Stanley, oversaw IPO and M&A transactions for a variety of companies.
The event was moderated by Glenn Chisholm, co-founder and chief executive officer of Obsidian Security, a Newport Beach-based cybersecurity startup backed by Greylock Partners.
“There are lots of different ways of looking at venture…so we’re trying to create a mix of people that fall into this view of [venture capital] as a continuum rather than a single idea,” said Chisholm.
Kicking off the evening, Clark shared some introductory thoughts on the momentum generated in the Southern California region.
“We fully recognize the technological revolution happening here and are seeing the evolution of a strong technical ecosystem. It would be an absolute miss for venture firms to not pay attention,” said Clark.
Launched as Google Ventures in 2009, GV is the venture capital arm of Alphabet, Inc. The firm has invested in more than 300 companies that push the boundaries of what’s possible. GV portfolio companies aim to improve lives and change industries in the fields of life science, healthcare, artificial intelligence, robotics, transportation, cybersecurity, and agriculture.
Following introductions and opening remarks, Clark established the evening’s tone by describing the evolving nature of venture capitalists (VCs) and their relationship with startups.
“The fact that VCs have become specialized, relationship builders, [who are] hyper-focused is an indication that entrepreneurs have more power and more ability to choose, and that capital itself is not a differentiator anymore,” said Clark. “A VC has to bring more than money to the table.”
Speaking to the entrepreneurs in attendance, Clark suggested that startups look for a VC who matches their style, is interested in their market space, and tends to invest at the startup’s current stage. For example, a VC focused on late-stage therapeutics might not be a good fit for an early-stage energy company. He iterated that a match is more likely to happen when both parties share common ground.
“Try to find a VC who has a risk tolerance for your stage of the company,” said Clark. “You don’t want to start with a VC that is not stage-appropriate and try to convince them to invest in your stage…The bar is higher when a VC invests outside of their normal stage, and you may be challenged to present them with metrics and milestones you’re not ready for at your stage of progression, and that can be a painful process.”
Chisholm then asked about the number of deals that GV does a year to give an idea of the firm’s scope. Clark responded that GV made over 50 investments in the past year and the firm has over $3 billion under asset management. Due to capital constraints a partner experiences when considering funding a startup, in addition to their limited time, Chisholm suggested considering the VC’s specific available expertise.
Clark added his own experience of balancing different board commitments across his portfolio companies:
“It is important to look at a partner’s board commitments before you approach them because it’s tempting to approach well-connected, seasoned VCs, but they may not have the time needed to spend on your company even if they’re on your board. A mix of both seasoned and newer VC partners is what you may ultimately want.”
Concluding the event, attendees posed several questions to Chisholm and Clark on engaging with a VC. Sharing that the circumstances vary for each company based on their progression, Clark highlighted some common items that ring true for the companies he has worked with.
“Consistently what we’re looking for is an inflection in engagement and momentum,” said Clark. “Momentum could be the number of users at an enterprise company who stay logged on more than an hour per day, MRR (monthly recurring revenue) or some core metric that shows you’re getting an increase in usage. These things are interesting at an early stage. With later stage companies, the answer could be engagement profitably where you can monetize customers in an interesting way.”
To learn about more upcoming events around the topic of startups, venture capital and more, visit innovation.uci.edu/events.