H:F panels on early, later stage venture capital offer insights for all

By Tom Ballard, Chief Alliance Officer, PYA

Two sets of investors – one at the seed stage and the other at later stages – offered some useful insights for attendees during Tuesday’s “Health:Further Festival” (H:F) in Nashville.

Obviously, they were focused on the healthcare sector, but there were a number of takeaways that would be useful to any aspiring entrepreneur.

We loved it when David Jones of Bull City Venture Partners declared, “We believe the entrepreneur is our customer.” He added that 80 percent of the firm’s decisions about investments at the Series A and below level is based on the people.

Gino Tenace of Tenegrity Ventures in Franklin offered two words to characterize the types of entrepreneurs that are of interest to him. “If you have a point of view, be willing to put it out there,” he said.

Jones and Tenace were part of an early morning panel titled “The New Age Early Stage.” That discussion was followed by a group of later stage investors who shared a memorable failure and also offered advice on the best ways to correct them.

In this era of the dominance of social media, we were struck by how dismissive all of the panelists in group two were to using it to connect with them. Both Roddy Bailey of Waller and Vic Gatto of H:F recommended a “warm introduction” from someone they know and respect.

Alex de Winter of GE Ventures reminded attendees about the importance of knowing each potential investor. In that regard, he said it is critical that they have answers to two key questions: “Why do you want to take our money and why should we give it to you?”

On the memorable failures topic, Bailey told the story of a client that he kept reminding to complete its due diligence ahead of being asked for it by a prospective investor. Those items included the start-up’s intellectual property position and the methodology used to establish its valuation. The medical device company did not heed his warnings, believing it had everything covered. When the start-up was deep in discussions with a potential investor, it had to call timeout to complete the work.

What was the end result? The valuation was only two-thirds of what the company had expected.

“Pay attention to details and be ready,” Bailey advised.

In an earlier life, de Winter was involved with two diagnostic start-ups that he determined would not make it on their own. The decision was made to combine them and bring in a new management team. The result was not what was desired.

“The synergies were not realized, and the CEO did not have start-up experience,” de Winter said. “One plus one added-up to less than two.”

PYA, the power behind teknovation.biz, is a major sponsor of H:F.

Stay connected with us on Twitter and LinkedIn. Article ideas and other suggestions should be sent to tballard@pyapc.com. Include the name and contact information (phone and email) for follow-up.