Stanford Entrepreneurship Videos

Roizen believes startups should have venture capital, but at the right time and used judiciously. She talks about the Barbell syndrome, where startups raise money for the first and last rounds, but not the rounds in between. It is very difficult to raise these middle rounds, which allow startups to treat money better.

Heidi Roizen provides tips for giving good pitches. First, focus on getting to the next step. The day you come in for an hour-long meeting, she says, plan on a 20 min. presentation (no more); get to the value proposition in 5 minutes; be articulate; manage the meeting; show experience and establish credibility.

Timing is everything when starting a company, Roizen says. Mobius raised their money in a good time and now have a lot of gas in the tank, she notes. Some companies needed money in June 2001 when people were not answering phone calls. She considers this an example of bad timing.

Roizen thinks that one of the biggest mistakes companies made in their hayday was considering VC money as their own. Entrepreneurs forgot they had to pay back their investments. If there is any value that gets created as a result of the entrepreneurs sweat and VC money, she says, then the VC's get the money back first.

Roizen believes terms are more important than a startup's valuation. One of the biggest mistakes entrepreneurs can make is to sell part of the company, think they've made a few million dollars, and then forget to factor in the investment from VCs, she says.

In an interview with Forbes magazine, Roizen projects what will happen in 2002. Mobius Venture Capital is excited to move forward. Since the bubble of 2001, companies that should have died have died, and those that are struggling are beginning to gain some traction.

Roizen talks about her experience in taking venture capital. She learned that if one can use venture funds judiciously to raise the inflection point, then it makes sense to do it. For her, it was an economic decision. Other reasons to take VC money involve credibility issues. Customers want to see that you have partners and money in the bank to prove that you will be around, she says.

Roizen notes some of the opportunities available for up-and-coming entrepreneurs: 1) There is still a tremendous amount of capital. Mobius, in 2002, had $500 M - $8 M left to invest in one fund, 2) There is rationality for the market with respect to hiring, office space and expectations of people to work with, 3) Company valuations are still pretty high, 4) Collaborative efforts between entrepreneurs and VCs, and VCs with other VCs, are strong 5) Working with a VC is the one time in your life you have someone working for you and paying you at the same time.

VCs give entrepreneurs money and want to get a lot more of it back sometime in the future, Roizen says. Unlike VCs, corporate investors generally want an early view into the technology and sweet deals from a business development perspective. If you are taking money from corporate investors, Roizen cautions, make sure you know what they want and what you want.

Roizen talks about what she would look for in a VC. From her perspective, acquiring a VC is the only time you're getting someone to work for you and pay you at the same time. She recommends people populate their investor pool with VCs who will add value to their company.

Roizen gives an inside glance at what VCs hopes to invest in. Her company, Mobius, is looking to invest in various fields from nanotechnology to component level architecture, to systems and wireless space.

Roizen believes the M&A market has always been a primary source of liquidity. She explains why big companies examine burn rate and ways to cut cost before they purchase smaller companies who may not be breaking even.

Previously, Roizen says it used to take three years for startups to reach liquidity; now the time frame is five to seven years. As a result, she recommends startups get to know the VC well and trust them because they will be working with the VC for many years. Now as an entrepreneur, she says, you have to work for a living!

It's often more difficult than it sounds, but it's important to be fanatically ethical when building a company, says Levinson. He believes people understand if it's an ethical environment right away. It is something that people gravitate to, he says, so you just have to build it early and never step off of it.

Number 8 in Frank Levinson's Top 10 Things You Must Have to Start a Business. Levinson believes you need "too little" money. He uses the famous coconuts from "Monty Python and the Holy Grail" as an example.