get founder services such as closing their critical first half-dozen engineers; attracting product managers; visiting and winning their first customer; getting started in Europe, Japan, South America, China, India etc; coping with intellectual property squabbles; composing offer letters; figuring out compensation schemes; getting quick executive level responses from the world’s largest five hundred customers; getting help on scaling infrastructure (networks, outsourced manufacturing, preferential tariffs with carriers, etc.); being instantly plugged into a huge skein of fellow founders and CEOs; raising subsequent rounds of capital; obtaining quick bank financing; getting equipment leasing; dealing with brutal M&A negotiations—I could go on an on. Suffice it to say that no ‘individual syndicate’ (most of which are riven with infighting and dissent) does this.
“Don’t forget too that it’s only mobile/Web apps companies that have a prayer of getting a product out with a small amount of money. But, that’s just the opening gambit. They have to make hundreds of subsequent moves for which they will need something other than a few hundred thousand dollars. Then, there’s a whole cadre of sectors—energy, financial, healthcare, semiconductors, enterprise/carrier infrastructure, SaaS—that people like us are interested in but few individuals touch.”
I also observed in my initial note to Moritz that at least when it comes to raising small amounts of initial capital, the options available to founders do seem to be expanding. So I asked him what Sequoia doing differently these days, if anything, to court early-stage startups and ensure that the firm has access to the most promising founding teams. His answer:
“We have always said that there is nothing we like doing more than getting into to business with first time founders where we can deliver a suite of services, including their very first round of capital. We are doing more of this today than we have ever done and since 2001, 38 founders—including Chad Hurley of youtube and Omar Hamoui of AdMob—have used Sequoia Capital’s offices as their headquarters for the critical first few quarters of their companies.
“Remember that once upon a time in a dark and distant land there were groups with names like CMGI, @ventures, ICG and Idealab that were loudly telling everyone that they would put us out of business.”
It’s provocative stuff that more than a few individual investors even startup founders might disagree with. We hope you’ll join us on November 30 at San Francisco’s Kicklabs for a full conversation with Moritz on this and other topics affecting today’s technology entrepreneurs and investors.
