fasttrack: advice from the experts
Lucy Marcus of Marcus Venture Consulting gave some tips for dotcoms looking for funding.
Lucy Marcus, founder and managing director of Marcus Venture Consulting (MVC), is an ardent supporter of the high tech entrepreneur. “Being an entrepreneur is really tough work, and it’s really lonely work. Anyone who has the guts to do it has all my respect,” she says.
Marcus’ enthusiasm for her job – which she describes as “the best in the world” — is essential, given her heavy workload. MVC currently receives around 300 business plans a month, and according to Marcus, every one is read. At a little over a year old, MVC has notched up some notable successes to date, including Vigil Technologies, which in November 1999, announced a second round of venture capital funding worth $5.5 million.
MVC’s remit is three-fold: First, the company works with early stage technology ventures in order to help them build their business; Second, it assists institutional investors, venture capital companies, and business angels to help build companies into which they have already invested, or plan to invest; Third, MVC assists investors in developing their technology investment strategies.
Marcus is assisted in this work by a “pool of talent”, in fact a team of 20 business people, drawn from a wide range of disciplines, but all with experience of working for technology start-ups. Like venture capitalists, this team is paid on an equity basis; that is, they receive a stake in the companies they work with. The rationale behind the pool of talent concept is simple, says Marcus: “You can only provide credible advice if you’ve been there yourself.” She claims that she and MVC can usually tell “within minutes” whether a potential client has an idea worth pursuing. But even for those ideas about which she is more dubious, Marcus claims she never turns down would-be entrepreneurs entirely: “We always tell them when their ideas need more work, and always encourage them to come back to us when they’ve had a re-think.”
So what are international investors looking for in a business plan? First, says Marcus, the idea needs to be both innovative and global if it is to stand out from the competition. In addition, the management teams of client companies need – in most cases – to be “qualified, reliable and capable of executing a successful business plan”. However, if a client’s management team is lacking in certain skills, but has a promising idea, MVC will frequently use its network of contacts to fill these gaps before introducing the company to potential investors. Finally, investors look for a growth plan which demonstrates mature business sense – that is, are ambitious but realistic.
Marcus’s approach, which she describes as “mentoring”, is open and informal, but she and her team insist that clients follow their advice. With a laugh, Marcus relates the story of one client who told her that he was going to get a Porsche as soon as his company received its first round of funding. According to Marcus, an animated debate ensued — but she got her way in the end. “Just because you want to make money, doesn’t mean your business idea will be a success,” she comments.