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Observations from 15 Years in
Start-ups and Venture Capital
The Business Builders Club
OSU
April 6th, 2010
Matt CarbonaraGeneral Partner, Reservoir Venture Partners
mcarbonara at reservoirvp.com
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Agenda Addressing Risks
Market Selection
Capital Intensity
Complete Products
Customer Acquisition
Customer Adoption
Feedback Cycle Time The Pivot
Scalability
First Best Executor
Q/A
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Addressing Risks
Prioritize and remove the key risks as soonas possible
Team
Technology
Regulations
Reputation
Customer Adoption Ecosystem
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Market Selection
A large market opportunity can helpovercome challenges
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Capital Intensity
Market opportunity should be ~10x the costsof creating the business
Allows for mistakes along the way
Allows for customer adoption ramp
Allows for competition / sharing of market
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Complete Products
Offer complete products in new markets; asmarkets develop solutions disaggregate
from end-to-end to best-of-breed
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Customer Acquisition & Customer Value
How can you cost effectively acquirecustomers
Cost/Time to Acquire
Value
Low High
H
igh
Low
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Customer Adoption
Understand the current solution and how thecustomer will transition to your offering Leverage current channels
Build bridges from legacy products
Seek to reduce barriers and friction
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Feedback Cycle Time
Understand your product feedback cycle timeand seek to reduce it as much as possible
Short Long
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The Pivot
The ability to adjust on the fly is moreimportant than the initial plan
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Scalability of Business Model
Where are the bottlenecks? Development
Production
Sales cycle
Customization / Implementation
Support
Human Capital (Service component)
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First Best Executor, Not First Mover
Getting it right is more important than beingfirst
First Best
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Entrepreneurial Math
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The Venture Capital Model
Raise funds every 3-5 years
Invest money over 3-5 years
Harvest investments over 5-10 years 1/3rd of investments lose money
1/3rd
of investments break even 1/3rd of investments return 5-10x
Goal is to return 3-4 times the fund
Goal is for each investment is 5-10x return
VCs have Investors Too!
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RVP Overview Columbus, Ohio based venture capital fund
National purview, but tend to invest close to
home $60M under management across 2 funds
Invest in IT, Healthcare and Clean Technology
Investment Criteria Exceptional teams with proven domain experience
Unique and compelling product value proposition
$200M+ high growth market
Sustainable competitive advantage
Capital efficient business model
Positioned to capture significant value in a healthyindustry ecosystem
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RVP Portfolio Segmentation
IT Healthcare CleanTech
Cardiox
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Questions?
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Speaker BioMatt has over 15 years of experience working with technologycompanies, in venture capital, product marketing and designengineering roles. He is both a General Partner at ReservoirVenture Partners and a Managing Director at TeleSoft
Partners, a Silicon Valley based Venture Capital firm. As aventure capitalist Matt has invested in Jungo Software (NDS),Matrix Semiconductor (SanDisk), Ikanos Communications(IPO: IKAN) and SigmaTel (IPO: SGTL). He was recently anEntrepreneur-in-Residence at TechColumbus. Prior to
becoming a venture capitalist, Matt was at TerayonCommunication Systems (IPO: TERN), where he initiallyarchitected and designed ASICs for Terayons cable modemsystems before moving into product marketing and productmanagement. He also had design roles at LSI Logic andAmdahl Corporation. Matt received his B.S., Summa Cum
Laude, and M.S. in Electrical Engineering from Ohio StateUniversity.
