In this video, Dana Mead, Partner at Kleiner Perkins Caufield & Byers, talks about venture capital. He offers insight about Silicon Valley and life as a venture capitalist. Mead begins his discussion, talking about his work at Kleiner Perkins. He says that he has been in the business for about 39 years.
He goes on to list the three major areas that his company focuses on:
1) Digital
- iFund: Internet everywhere
- sFund: Network of people, not things
2) Lifesciences
- Stop the metastasis of cancer
- Stem cell technology to treat ALS, Parkinson’s
3) Greentech
- No tradeoff electric vehicle
- Consumer incentives for green behaviors
- Clean cost – competitive electricity
- Making the grid intelligent
- Solar balance of plant
He uses life sciences as a prime example to explain his company investment focus. He says that there are three sections around diagnostics, devices, and therapeutics. He states that personalized medicine means, “The right therapy for the right patient, at the right time.”
He goes in depth about these sections and talks about how the industry has evolved. He says that he is proud of the diversity of the company, “…Diversity that you see in this slide, better reflects entrepreneurship in innovation around the world.”
Mead shows a slide explaining how much venture capital evolved from 1980 to 2006. He states that venture capital, “…Went from a very small boutique industry to an asset class.” He says that California is a great place for venture capital.
He goes on to share that Kleiner Perkins is, “…On track to raise about $16 billion and we’re on track to invest about $28 billion, this year.” He starts talking about investing and who the money is being invested by. The investors consist of endowments, foundations, funds, individual investments, and partner investors.
Mead explains how VC’s get paid. “We get a management fee on the money that we manage, and we also get part of the side carry.” He says that there are about seven to eight thousand VC’s, and that to become a VC, you have to network and meet people.
When discussing the day-to-day tasks of a VC, he states that networking is one of his favorite parts. He lists four important areas in venture capital:
1) Recruiting
2) Raise Money
3) Strategy
4) Network – to any challenge that the company has.
He says that, “the people are the most important in any business.”
Mead goes on to discuss three major areas to look for in a new venture:
1) Technical/Clinical (IP): Is there a way to mitigate these risks?
2) Market (unmet clinical needs): Do not take as many market risks.
3) Management: Look at who is associated with that venture.
He gives examples of where these new ventures come from and says that, “if you have a great idea, you want to get funded.” The best place to start is with family, friends, and angel investors. Mead explains the financing plan and how companies get value. He gives the audience as example of an investment using Series A, B, C, and D.
He goes on to list five success factors in VC for entrepreneurs:
1) Excellent Leadership, Passionate Founders
2) Large, fast growing, unserved market
3) Reasonable Financing
4) Sense of Urgency
5) Missionaries, not mercenaries
He lists the secrets of being an entrepreneurship and stressed that being balanced, passionate, focused, and persistent is key. Do not focus on the exit and remember to have fun.
He briefly talks about The Silicon Valley Innovation Formula. He explains that you need well-trained people, capital, great universities, an ideal location, collaboration, and diversity. He explains that the West Coast and East Coast have a very different VC culture.
In closing, Dana Mead summarizes the key factors in his presentation:
- Create your own innovation ecosystem
- Team with a business or engineering colleague
- Invest in IP
- Focus on long unmet clinical needs
- Be passionate about your ventures
- Have Fun!
