by Alastair Goldfisher
A couple of weeks ago when Norwest Venture Partners announced its investment in health care cloud provider ClearDATA, the firm said it was the third time it had worked with CEO Darin Brannan. His previous startups Verio Inc. and Website Pros both resulted in IPOs.
So here’s a question for VCs: Do you prefer working with entrepreneur that you’ve worked with before?
I asked that question today during a panel I moderated at Partner Connect 2012 on How to Find a First Class Entrepreneur. The panel featured Jeffrey J. Bussgang, general partner of Flybridge Capital Partners; David Jones Jr., chairman and managing director of Chrysalis Ventures; Scott Kupor, partner and COO of Andreessen Horowitz; and Edwin Poston, general partner and co-founder of TrueBridge Capital, which is an investor in Flybridge and Andreessen Horowitz.
“Great entrepreneurs fail,” said Bussgang, but past failures are not a deterrent to backing an entrepreneur again. “What matters most is whether that entrepreneur has the humility and blueprint to do it again.”
The panelists agreed on that note, and Jones added: “I’ve made money off of those who previously failed.”
Poston pointed out that some of today’s highest valued VC-backed companies, such as Facebook, were started by first-time entrepreneurs.
In terms of geographic preference, the panelists agreed that good entrepreneurs can be found anywhere. Kupor, whose Silicon Valley-focused firm is based in Menlo Park, Calif., says geography doesn’t matter as much as whether there’s a supportive ecosystem and entrepreneurial culture.
That was a refrain echoed by Poston: “We have a big belief in California. It’s easier to acquire talent there and achieve an exit.”
Jones, who acknowledged that he invests in health care and tech companies in the “flyover state” of Kentucky and in surrounding regions, said there are pluses and minuses to investing based on geography. But what matters most is whether the entrepreneur has the right skills set. ”Proven entrepreneurs have fire in the belly,” he said.
“The question is whether the East Coast can generate a mega winner,” Bussgang said. Bussgang, who teaches a class on entrepreneurship at the Harvard Business School, said that although, entrepreneurs can be found anywhere, the next hot spot for entrepreneurs may be in the Big Apple, where his Boston-based firm has already opened a branch.
“In my class, a third of the students want to go to New York to be entrepreneurs. Not hedge fund managers, but entrepreneurs,” he said. “They used to want to go to Silicon Valley or Boston, but New York is a becoming a talent magnet for entrepreneurs.”