U First Capital, a Silicon Valley-based venture capital firm and accelerator, held its monthly speaker event at their offices in Santa Clara, CA. This week’s speaker guest was Nitin Chopra, partner at a venture capital fund, Shasta Ventures. Some of the topics included today’s investment strategies, Silicon Valley investment trends, how long it takes from first contact to a term sheet, how to reach a product-market fit, and how do startups generally succeed
Nitin specializes in enterprise and infrastructure software, with a focus on security and data technologies. An early stage venture capital firm specializing in Series A and B, Shasta Ventures invests in multiple areas, from consumer tech to enterprise platforms. Additionally, their areas of interest and involvement include emerging platforms as well, along with companies working in the fields of virtual reality, connected spaces, connected homes, etc.
“NEST was one of the first connected devices we invested in, now acquired by Google,” Chopra stated.
According to Chopra, one of the most challenging stages for every startup is reaching a product-market fit, and the process is very different across the industries.
“Early signs of product-market fit are very different for a security investment versus a consumer investment versus a software as a service (SaaS) investment,” he emphasized.
For instance, for a SaaS company it’s all about the momentum – how fast the startup is building this momentum, and how fast others can catch up, whereas for other types of companies a good proof of concept (POC) may be enough.
Based on the overwhelming statistics, 9 out of 10 startups fail. In other words, we’re talking about whooping 90% of failure. CB Insights has conducted the Startup Failure Post-Mortem survey, thoroughly analyzing the reasons of that failure. According to their data, the three most popular ones are the following:
- No Market Need (42%)
- Run Out of Cash (29%)
- Not the Right Team (23%)
However, as noted by Fortune, No Market Need is a phenomenon that was once fought by Steve Jobs himself. In the early days, mobile phones were disregarded as a “novelty.”
“A lot of times, people don’t know what they want until you show it to them,” Jobs famously argued.
So it would be safe to say that most startups fail due to running out of cash, which ultimately leads to the inability to show the world what it needs to see, which is why the right venture capital investment is such a crucial ingredient to success, even though not necessarily a required one.
Working mostly with Series A and Series B companies, there are three common things Nitin Chopra saw in those startups, which made it to the next level.
“[They] really focus on customers’ problems, just being maniacal about it. Repeatedly addressing those problems and whether they can be scalable across multiple customers. That’s the first common thing. The second most common thing is a completion of team and business expertise. The companies we’re involved with have really strong product and technology assets. It’s almost pre-requisite for building a strong company.”
For the advice on how startups can actually succeed, Chopra noted building the best product and getting the best team, as well as having the right partners around you.
“Partners that are consistent and alliant with your view of the world, which means that you make your decision based on that not all money is the same. It’s not like one investor is better than the other, it’s like you have to pick the one who’s most alliant with your views of the world. That’s also true for your employees, advisors, and even location.”
Additionally to offering venture capital as a service, U First Capital provides accelerator opportunities to startups as well. For a limited time, University of California-affiliated startups may apply for the program at zero cash for the coming year. Some of the benefits include monthly mentor sessions, help with the market strategy, fundraising, and team building.
“What I really required is a deep interaction with both corporate as well as venture community, and I think I’m getting it here,” said Ajay Jotwani from i2Chain. “What really excites me is the VC interaction they bring, and access to the university labs as well. This is a very unique experience.”
You can learn more about the program and application process here. The program is open for startups both onsite and remotely.