What is a Venture Cafe?
A Venture Café is an informal environment where engineers, business people, and potential investors can get together and talk about starting new high-tech companies.
You can have a Venture Café wherever it is convenient: in a bar, a café, a hotel lobby, or even a fast-food restaurant.
The most important thing is that the setting be neutral, so that either party can get up and leave at any time -- without saying goodbye to the host, or waiting for the check -- if they start to feel uncomfortable.
The ideal Venture Café venue is a café or bar where drinks only cost a couple of dollars.
Why Should Entrepreneurs Attend a Venture Café?
When an idea is new, it seems perfect.
But most ideas for new high-tech businesses require a great deal of tweaking before they can blossom into profitable corporations.
When cultivating a new idea, it is often useful to bounce the idea off fellow technologists, angel investors, and venture capitalists (VCs) before spending huge amounts of time and money to turn the idea into a new business.
A Venture Café is a place where entrepreneurs can talk about their ideas, listen to other people's ideas, and provide constructive criticism.
The underlying assumption behind a Venture Café is that everyone who has a sincere interest in starting a new high-tech company -- or in helping those who do -- can contribute something to the general pool of information.
A would-be entrepreneur might participate by listening to someone's idea and making a suggestion about how it could be improved.
Or, she might participate by listening to an entrepreneur recount the various obstacles she has had to overcome and saying, "Yep, you're right. That's how it is."
Entrepreneurs often disagree about what would be the best way to exploit a new business opportunity.
Sometimes, the "constructive criticism" that gets doled out at a Venture Café can be awfully hard to take.
But most entrepreneurs would prefer to get the difficult questions from their fellow technologists, in the informal setting of a bar or café, rather than in the formal setting of a VC's office.
After all, VCs tend to be much more difficult to deal with when they are evaluating an idea in front of their partners.
And corporate lawyers can charge hundreds of dollars an hour for their services.
Can Going to a Venture Café Increase My Chances of Obtaining Venture Capital Funding?
Talking one's ideas over with fellow entrepreneurs provides a good way for an entrepreneur to see the flaws that are inherent in his business plan.
An entrepreneur will be much more successful if he spends some time identifying the problems associated with his business, and coming up with solutions to the problems, before he asks professional VCs and angel investors to invest in his business.
The most valuable thing you can get out of a Venture Cafe is a referral -- to an angel investor, a technologist who is looking for work, or a potential customer.
What Are The Hot Areas for Investment Right Now?
As soon as you hear that a new high-tech area is considered "hot," start worrying.
With that said, the venture capitalists I've talked to seem extremely excited about the following:
care products and services for aging baby boomers
* Network security
* Data storage
* High-bandwidth solutions
* Wireless technologies
* Companies that focus on the enterprise environment
* Companies that can prove they will make a profit
* Companies with loyal, satisfied customers
* Companies that can map out a clear exit strategy
If you happen to be working on an extremely secure high-bandwidth enterprise-wide data storage solution which can solve the problems related to aging by sending packets of data through a wireless network -- and you have pages of testimonials from customers who are so satisfied with your work that they would never dream of doing business with any of your nonexistent competitors -- you should have no problem raising financing in the current environment.
It would also help if you could line up a guaranteed exit strategy, and if your accountant can prove that your company will definitely become profitable next month.
Barring that, you're going to have to spend some time at entrepreneurial networking events, making friends with a few venture capitalists.
What lessons have high-tech entrepreneurs learned from the recent stock market crash?
Entrepreneurs have learned how important it is to set some money aside to pay their taxes. A lot of times, entrepreneurs and their employees have the option to buy stock in their own companies at a reduced price. As soon as the entrepreneur exercises her option to buy stock, the IRS says that she has experienced a gain -- even if she does not sell any of this stock.
Some entrepreneurs have exercised their options, bought stock, and then watched the stock price plunge. In some cases the stock price dropped so low that the value of all the remaining shares was less than the entrepreneur's tax burden.
Entrepreneurs need to remember to sell the quantity of stock they need to pay their taxes. Don't take risks with the money you owe the government. You can take risks with your own wealth, but don't take risks with the money you owe the government.
As soon as you exercise your stock options, figure out how much you owe the government. Sell the quantity of stock you need to acquire this tax money. Then, put the money aside in a secure bank account. Do not speculate with your tax dollars.
You might consider buying a treasury bill that matures on March 31st so that the money will be ready to go on April 15th, but don't use your tax dollars to speculate on the stock market.
If you could give entrepreneurs three pieces of advice, what would they be?
#1. Check references! Ask your potential business partners for a list of ten people who can vouch for their character. Check references on co-founders, employees, and potential venture capitalists. Figure out who your potential partners have worked with in the past, and what their former co-workers have to say about them. If possible, perform your due diligence over beers at the local pub, or over coffee at the local cafe.
Honorable people are impressed when you take the time to check their references. Honorable people are happy to introduce you to their friends. People who have something to hide are scared when you talk about checking references, since they don't want you to learn about their past. It's a good idea to learn everything you can about the people you are considering working with. It's much easier to learn about a person's bad habits by asking their former co-workers, than by starting a company with them.
Entrepreneurs who check references are show the world that they respect themselves and their companies. Entrepreneurs who check references don't let anybody jerk them around.
#2. Ask your family to support you emotionally in your entrepreneurial venture. People always underestimate the psychological costs of starting a new venture. Make sure that everyone in your household understands what you're doing, and why you're working so much.
Your family members know how much you hated your old boss, and how miserable you were working at your old job. In many cases, it's easier for an entrepreneur's family to support her in her new job than to listen to her complain and complain about how bad her current situation is.
#3. Never risk more than you can afford to lose!
Why is There a Coffee Cup on the Front Cover?
The coffee cup on the front cover is meant to symbolize all of the cafés, restaurants, bars, and hotel lobbies where engineers and business people meet to discuss their ideas.
Why Is It So Important to Screen Your Potential Business Associates?
If you have a good idea, and you understand your technology, and the problem you are solving really needs to be solved, lots of people will want to get involved with your business.
Your job as an entrepreneur is to make sure you only accept help from the right people.
Why Shouldn't I Work With Everyone Who Wants To Help?
The most valuable things you have when you are starting a new business are your enthusiasm for your idea and your ability to develop solid trust relationships.
You want to preserve your ability to trust other people for as long as possible.
Why Did You Write The Venture Café?
I wanted to find out how a 22-year-old kid could turn a class project into a $90 million company.
This is what I learned: Before a 22-year-old can turn a class project into a $90 million company, he needs to get help from the right people.
I wanted to show readers that the secret to building a great high-tech company is building a great network of business contacts.
Finally, I wanted to remind would-be entrepreneurs that the best way to build a great network is to attend lots and lots of informal networking events, and to follow up these meetings by inviting people out for a cup of coffee.
What is Pehr doing now?
These days, Pehr is working as the Director of Network Administration at E Ink Corporation. He attends numerous entrepreneurial networking events around Boston, and he's keeping his mind open about possibly getting involved in another entrepreneurial venture.
Who Should Buy The Venture Café: Secrets, Strategies, and Stories From America's High-Tech Entrepreneurs?
I wrote The Venture Café specifically for:
(1) would-be entrepreneurs who are considering leaving their jobs to start new high-tech companies;
(2) college seniors who are deciding whether to accept a job inside a major corporation or go off on their own;
(3) business school students who are considering forming their own corporations;
(4) working entrepreneurs who are trying to figure out how to make their companies more successful; and
(5) friends and relatives of the above.
I hope that The Venture Café will help engineering professors, business school professors, chamber of commerce representatives and other community leaders understand the power they can exert by bringing people together to talk about starting new high-tech companies.