Venture capitalist pushes startups to concentrate on team building

Sean Jacobsohn, a California venture capitalist and UW-Madison grad, said potential company founders should focus on the quality of their “team” before looking for financial backing.

“If there is a truly great opportunity, there are going to be countless other teams across the
world,” Jacobsohn said during Tuesday’s WARF-backed “Entrepreneurons” event on the UW-Madison campus. “Finding the best talent in Madison is not the way to do it. You want to look at the best talent around the world for the opportunity presented.”

Jacobsohn was one of four venture capital experts who joined Tuesday’s event to discuss the venture capital industry and give advice taken from their personal experiences on how to succeed in the current business climate.

His keynote address was peppered with advice about searching for startup founders with a strong background in what they hope to do as well as strong references from trusted people in the given industry.

“Look for people who can add value to your company, not just money,” Jacobsohn said. “The goal is not just to raise money. The goal is to build a lasting company.”

Jacobsohn said the quality of a company’s team is a key consideration for him as he works through a selection process that generally starts with approximately 1,200 companies and narrows to 10 over four stages. During those stages, Jacobsohn also considers the market the startup company hopes to operate in, the future fundraising needs the company will have and the potential buyers the company might generate.

After his keynote, Jacobsohn participated in a panel discussion that included Terry Sivesind, a veteran in Madison venture capital business who has helped new entrepreneurs in the university community; Carrie Thome, the director of investments for WARF; and Chad Raube, who recently became the CEO of Guaranty Services Group, a Wisconsin company that operates and incubates companies in the big data arena.

The panelists mainly addressed issues they see when companies have unreasonably high valuations or come into investor meetings without a strong core concept or plan.

Each member preached tempered expectations and patience in regard to valuation, saying companies that have realistic expectations are generally the ones that can build themselves up and be successful over time.

In the other main topic of the panel, Jacobsohn characterized the business meetings with potential investors as a “dating game” where each side feels the other out to see how viable a partnership could be. He said the most successful people are those who show up with a strong concept and PowerPoint and show the ability to adapt to the inevitable obstacles they will face.

Sivesind added another hurdle startup founders face is not recognizing the need to give up a part of their company to attract investors who can help the company grow.

“Do you want an oyster cracker you can eat by yourself or do you want a couple of slices of large pizza you can share with a group?” Sivesind asked. “Allow people to come in that can make your business much larger than you could on your own.”

Raube ended the event by praising the investing climate he has seen in Wisconsin since arriving with his family.

“I would love to see [venture capital] take off,” Raube said. “In the future I think the state will turn a corner and it will be a great success story.”

Tuesday’s “Enterpreneurons” event was one of an ongoing series supported by WARF and held in the Wisconsin Institutes for Discovery building. Other campus partners include the Weinert Center for Entrepreneurship at the UW-Madison School of Business, the Law and Entrepreneurship Clinic and the Office of Corporate Relations. The next panel session — on marketing, public relations and communications — is planned for March 27.

— By Jack Casey