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VC execs offer 12 lessons to entrepreneurs

By David Schwartz
Published: October 14th, 2009

Writing on the web site Open Forum, Guy Kawasaki, founding partner and entrepreneur-in-residence at Palo Alto, CA-based Garage Technology Ventures and founder of, an online “magazine rack” of popular topics on the web, recounts his interview with Mike Moritz of Sequoia Capital in Menlo Park, CA, and Paul Graham of Ycombinator in Mountain View, CA. Moritz’s VC success over the past 20 years is demonstrated by his investment in companies such as Google, Zappos, Yahoo, and PayPal, while Graham’s YCombinator is at the leading edge of tech start-up creation, Kawasaki says. “Contrary to the typical bull shiitake that most venture capitalists spin (‘we want a proven team in a proven market with a proven technology’), these guys are really making things happen.” Here are 12 lessons Kawasaki learned from the interview:

  1. Entrepreneurs don’t have to be “proven” to impress VCs, but they do have to get things done and be creative, enterprising, determined, and smart.
  2. Entrepreneurs do not have to present proven things. When things are already proven, they tend to be uninteresting.
  3. Entrepreneurs should not only be good at building things, they should also enjoy doing it. The question is: “What have you built outside of school or work?”
  4. Entrepreneurs must prove to their investors that the company is the most important thing in their lives.
  5. Sequoia loves the underdog. The firm is funding many companies in China, India, and Israel — and these companies are producing impressive revenues and innovation.
  6. It’s okay if entrepreneurs do not know how to make money yet. The most important thing is to have a great product.
  7. The best financial forecast is to develop a product that people care about. If that is the case, the money will follow.
  8. VCs have super fine-tuned BS detectors. Entrepreneurs can’t fake sincerity or the pursuit of excellence.
  9. Generic language, like “passion,” is a turn-off for investors. Entrepreneurs shouldn’t say they have passion — they should show it.
  10. The smarter the investor, the more entrepreneurs should be candid.
  11. Entrepreneurs should not surprise investors but be forthright.
  12. Today’s start-up environment is a world in which entrepreneurs must be self-sufficient. They cannot rely on getting outside money.

If you’re an entrepreneur seeking to raise VC money, Kawasaki says this is the most valuable video you’ll ever watch.

Source: American Express OPEN Forum

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