Subscribe
Previous Post
Sean Wise is a prominent expert on venture capital. As a partner with Wise Mentor Capital, Sean gets a chance to work with a number of companies looking for funding. He also acts as an advisor for several seed funds and most recently was involved with CBC’s tv show Dragon’s Den which brought together investors and entrepreneurs. It was an entertaining show to say the least, and a second season is planned.
I decided it would be interesting to learn a little bit about what Sean does and get some insight into the venture capital world. Lots of startups go out looking for money. And although we always hear about those deals that netted owners millions and millions in cash, there’s a thousand more people still pitching their wares, hoping for a break. Getting money isn’t easy (at least most of the time). There are challenges, risks, pros and cons.
Quick disclosure: Sean Wise was involved with b5media’s recent capital raise as an advisor. I still asked tough/important questions (I hope!) but I did stay away from any discussions relating to b5 specifically.
Interview Highlights
- Check out the link to Sean’s demonstration of an elevator pitch. It’s hysterical (but informative too!)
- Sean lists three areas of particular interest for him as someone involved with a lot of technology related investments. I think people could debate this one point endlessly and generate a ton of interesting discussion.
The Interview with Sean Wise
1. I read in your bio that both of your parents were highschool dropouts, but because successful entrepreneurs. You then go on to say that your education was paramount in their minds and yours. If they were successful without significant education, why was it so important for you and your parents? And what role do you see formal education (from highschool up) playing in an entrepreneur’s success?
I think times change. When my parents left school, lack of post secondary education was not a hindrance to success. But those times are long gone. Now even a BA isn’t enough. I spent 8 years in school (including law school and getting my MBA) and I learned a ton. Could have I been as successful without the education? Maybe, but as my dad says “you can either go to school, or learn from the school of hard knocks.”
2. You work extensively with venture capitalists, but you’re not a venture capitalist yourself?
Correct. I don’t manage a fund, and so I’m not a venture capitalist. I spend my time doing three things:
- Educating entrepreneurs how to raise capital, through our bootcamp program, through Dragons’ Den, through my column in the Globe and Mail.
- Raising capital. I have a limited market dealer’s license from the Ontario Securities Commission (something every Agent should have)
- I sit on the boards of companies I have helped fund, to assist in their growth.
3. If someone gave you $10,000,000 right now to invest, where would you put the money?
I’d undertake seed investing and spread the money over 7-10 deals in three spaces:
- Enterprise 2.0 (the next step in web 2.0) which brings the lessons of web 2.0 to the world of B2B
- Mobile (which I believe will end up being web 3.0)
- Social capitalism, I think those “who have”, have an obligation to invest in bettering the world. And yes, you can do so at a profit. Just look at the world of micro credit to see how it’s done.
4. How much of the venture capital world is real analysis, evaluation and due diligence versus luck versus guts/instinct?
I’m not sure I’ll win many friends with this answer, but I think it’s about 50/50. You have to spend a lot of time thinking about your investment mandate (what you are going to invest in), then a lot of time picking a winner, but in the end the reason you take a portfolio approach is because you never can be 100% sure which investments will end up Dogs and which will end up Stars.
5. If I wanted to go raise some money right now, what’s the first thing I should do?
Hire me? No, seriously.
- Write the business plan, really understand the business, the highlights for investors, the market, the use of proceeds, etc.
- Cull it down to several key messages, an elevator pitch so to speak.
- Then target those investors with a history of doing deals with companies in your space, at your stage, and with an appetite to do more.
Or simply, read The Art of the Start
6. You were involved with the CBC’s reality show Dragon’s Den, where entrepreneurs pitched a group of investors. It was by all accounts a success, although there’s been a fair bit of criticism (from intelligent / successful people). Can you tell us what you’re changing in Season 2? Are you going to address some of the concerns people have with the way deals are done?
Has there been? Having not heard it directly, I can’t comment that the criticism is coming from intelligent and successful people. Nor can I speak for the producers or the CBC, for that matter. But from my perspective, I’d like to see more deals done and more deals done at reasonable valuations. I’d also like to see some of the bashing by the investors/Dragons evolve into more constructive criticism. I can’t disagree with the calls the Dragons made, but I might have delivered the message differently. But then, maybe that’s why I’m not a dragon, only the Dragons’ Keeper.
7. How do you measure success?
It’s different for everyone, I guess. My personal scorecard revolves around the positive contribution that I can make into other people’s quality of life. I honestly believe that the greatest returns come when you selflessly serve others, although it doesn’t hurt to do so while making a buck.
8. You work constantly with entrepreneurs, but do you consider yourself one?
Absolutely, in fact I had my first venture at 14, and have had 5 since then. My roles, as columnist for the Globe, as Chair of the Canadian Venture Forum, even as Dragons’ Keeper all allow me to continue my entrepreneurial dream, of helping others succeed.
9. How can someone get to where you are in terms of the work you do?
Well assuming they would want to, which I’m not sure they would if they saw the hours I put in, I think it comes down to: approach, dedication and tenacity. Or as Kurt Angle (my favorite wrestler) puts it: Intelligence, Integrity and Intensity.
10. Do you think we’re in a bubble situation with Web 2.0? What similarities and differences do you see with the way things went in 2000-2001?
Is this a bubble? Only time will tell. Economics are always cyclical, so the key becomes knowing how to ride the wave. My biggest successes in 2006 were B2C, but in 2007, I’ll be focused more on B2B enterprise 2.0 plays (http://sloanreview.mit.edu/smr/issue/2006/spring/06/ and http://blogs.zdnet.com/Hinchcliffe/.) B2B infrastructure and platform plays are easier to fund in Canada than their B2C ad model cousins.
11. Can you name some companies, other than the ones you’re currently involved with, that really interest you? And tell us why…
Companies I’m watching in 2007: NowPublic, Cambrian House, DabbleDB, Zigtag and b5 Media.
12. When seeking money for your business, what’s the most important thing to remember?
It’s all about fit. You need to match the opportunity with the investor. But if you have the right pieces, then it is all about understanding how they fit (i.e. how to pitch ‘em and to whom to pitch ‘em to.) If you don’t have the right pieces, well, it ain’t going to happen no matter how hard you wish it, after all you can’t put lipstick on a pig.
Conclusion
Almost every startup company, particularly in the Web 2.0/technology world is going to look at the possibly of getting funding. Some dream of it. They see riches being thrown at them for their spunky little startup, and suddenly their big shots. It happens, but more often than not it takes a lot more than that. And even in those super successful cases, Sean’s advice still holds true.
It was fun speaking with Sean, I wish him the best and thank him for taking the time. You just might want to give Sean a call if you’re looking for cash (I hear he hands out $20 dollar bills if you tell him a great joke. Ok, I made that part up.)
Did you like this post? If so, please subscribe to Startup Spark via RSS or email. Just click that link to get started!
