Last week I spent about 45 min on the phone with Ken Elefant from Opus Capital – asking questions, scribbling answers, and getting a new found respect for interviewers/journalists.
The call was set up by the team at Rainmaker Communications after I was contacted regarding the new fund that Opus closed.
Ken seemed like a great guy. He was easy going, answered all questions, and was patient as I struggled to play interviewer.
Here’s some insight from Ken on a number of topics [along with some of my thoughts].
On the fund that Opus closed: $280 Million for early stage investing. Opus, as a lead investor, looks for market leading companies who will require 15 – 25 million in venture capital to succeed, of which Opus looks to invest ~$8 million over the life of the company.
[I think that the term 'early-stage' is confusingly used by VCs. It seems that they use 'early-stage' to mean after product/company validation, which isn't very early-stage wrt the company life-cycle]
On services provided: Opus provides four main services to portfolio companies: (1) help with recruiting; (2) open doors with potential customers and partners; (3) marketing / product vision side – through the direct team at Opus and an informal network of entrepreneurs who can act as indirect advisors; (4) financing strategy.
On how to enter the VC job market: While it’s a difficult market to get hired into, because of the low number of job opportunities, there are some ways to improve your chances. (1) The Kauffman Fellowship program (Ken is an alumni) provides incredible opportunities along with a valuable network; (2) Develop relationships with VC parties (GPs, …); (3) Create themes, find players, and communicate it; (4) Get connected via another medium.
[I really liked the third suggestion - showcase your potential by playing the role of a venture guy. Establish themes, find early players, communicate your vision. I question how effective this method could be though]
On the type of individual who makes a good early-stage vc: real operational experience, a proven track record.
[nothing too exciting here]
On angel investors: angels and early-stage VCs collaborate all of the time. Who assumes the lead investor role in the early-stage investment depends on the angels and VC firm involved and Ken doesn’t view angels as competition for deals. Deal flow from angels is great and therefore its critical for early-stage VCs to maintain great relationships with angels.
[I suspect that due to a number of reasons - angels becoming increasingly organized, super angels, ... - that competition will increase between early-stage VCs and angels]
On where the industry is going: A lot more money is pouring into venture investing. Firms are expanding into earlier stages to secure investments and are starting to compete for deals by developing competitive advantages (Opus touts their level of real operating experience).
On their ideal entrepreneur: There are many high-quality entrepreneurs who can exit at $15 – $20 Million by being bought by Yahoo. Opus wants to work with those entrepreneurs who want to be the next Yahoo.
[aside: I've been rethinking my earlier thoughts on partial founder buyout. I'll share them later. But Ken's response here validated some of my new beliefs]
On investment focus: Ken’s focus is in two areas – lead generation and mobile advertising. He views the founding team as the key data point. Domain experts and/or serial entrepreneurs are of equal importance. To get a meeting you should obtain an introduction by an entrepreneur who has a good relationship with the firm.
That’s it. I asked a bunch of stuff that has been on my mind recently. A very big thank you to Ken for taking the time to answer the questions, and to Stacy & Julia at Rainmaker for setting it all up.