Extreme Startups’ Sunil Sharma Shares His Thoughts on Venture Capitalism at Demo Day in Toronto
“Shhh,” Sunil Sharma lulled over the video clip introducing Extreme Startups. A hushed silence fell over the yammer in Berkeley church at 315 Queen Street East. Entrepreneurs, venture capitalists, angel investors, media, and aspiring businesspeople packed the hall. It was most likely one of the hottest days this summer will ever see, and the church did not appear to have sufficient air conditioning, bringing presenters back to memories of their wedding days and bar mitzvahs.
As the clip ended, Sharma smiled and welcomed us to Demo Day.
Sharma is the Chief Connector at Extreme Startups. The other organizer of Demo Day, and Chief Innovation Hunter at Extreme, Andy Yang, thanked his family for being so understanding regarding his busy-ness. Paul Singh took the stage after the two organizers introduced the event, and talked Moneyball.
Singh had a look at Bill James’ and Michael Lewis’ Moneyball theories, and then brought Eric Ries’ Lean Startup methodology and Peter Sims’ Little Bets to the spotlight. He explained that investing was basically bridging venture capital with functional expertise, and also emphasized three criteria for evaluating projects: having a small team (engineer, UX/design, and marketing), small measurable usage, and a functional prototype before investment (or previous success).
To be really safe, he recommended investors put their money in 20 startups. Another interesting point Singh made was that seed capital is just an initial bet designed to give investors more data for subsequent bets. Singh closed off to strong applause and Sharma took the stage to welcome Tim Chang from the Mayfield Fund.
Chang first compared Silicon Valley to Hollywood, with every entrepreneur having a startup and every writer having a script. There are too many chiefs, he observed, and really good engineers are very hard to find as they get poached by companies like Facebook, or they end up starting their own project.
He showed us what we took for granted North of the border: instead of being concerned with getting faces into parties of certain venture capitalists, Canadian entrepreneurs have no access and no choice but to focus on building companies. “Stay focused. We will come here,” he reassured entrepreneurs.
He also advised starting to think about closing the second round right after getting a seed investment by building a relationship with investors and making sure you follow through with what you plan to do. There are two things VCs talk about behind the closed door, he shared:
- Can this team take it to the next level? Can they recruit more senior, more rockstar people than their current team?
- Traction—do they have a path to get to higher revenues? Work backwards from target revenue.
Chang also advised building up a board of advisors, and starting with a virtual chairman (usually an entrepreneur who loves the first year of projects). Chang also urged us to find data scientists—or “stat jocks”—in order to help us make sense of all the data we’re going to have access to.
He closed by chatting about social network mechanics (status updates, following, pinning, reblogging, etc.) and stacking mechanics on niches or capitalizing on growing niches by aggregating, being a white label player, or advertising.
