Home:   Entrepreneurs Corner:   Q&A With Kathy Harris, Partner, Noro-Moseley Partners  

Send This Story

X

Email to a Friend

Please fill out the following information and click submit

Friend's Name

Friend's Email

Your Name

Your Email

Comments

 

Submit

Sending Email...

Thank You! Your email has been sent.

X

Email to a Friend

Please fill out the following information and click submit

Friend's Name

Friend's Email

Your Name

Your Email

Comments

 

Submit

Sending Email...

Thank You! Your email has been sent.

Q&A With Kathy Harris, Partner, Noro-Moseley Partners

by Mary Welch, Editor

August 20, 2007

AW: What is venture capital?

Kathy Harris: Venture capital is money provided to young, rapidly growing companies that have the potential to create significant value for their investors.  Venture firms typically raise capital through private partnerships funded by private and public pension funds, endowment funds, corporations and wealthy individuals. 
  
AW: What do you need to make a presentation to a venture capitalist?

Kathy Harris: We typically begin the process (and it is a process) by reviewing an electronic version of an executive summary and a PowerPoint presentation.  The slide presentation should be clear and consistent with a focus on the opportunity, the market, management and the business model (revenues and profits).  The entire presentation, including Q&A, should be kept to an hour.  Entrepreneurs often ask how important a full business plan is to our analysis.  It isn’t critical for the first interaction, but I firmly believe that you haven’t done enough homework around the company’s long-term viability if you haven’t done the research to write a business plan. 
 
AW: At what stage should a company seek venture capital funds?

Kathy Harris: A company should pursue venture capital when management has a valid use of proceeds such as scaling a viable business model, funding product beta tests, attracting and supporting early customers and in some situations, funding acquisitions.  Companies in the seed stage or idea stage are generally better suited for individual or angel investors. 

AW: What are VC looking in a company?

Kathy Harris: VC’s want to back companies with a management team with extensive domain expertise and start-up experience; a sizable market with a steep growth curve, significant pain in the marketplace that can be cured with the company's products or services; and a clear, defensible path-to-profitability. 

AW: What are the different avenues for funding available to a start-up company?

Kathy Harris: Most of the funding for a start-up comes from personal savings (I’m astonished at the number of entrepreneurs who have charged payroll to their credit cards), friends and family and angel investors.  We also see owners fund start-ups from consulting fees and occasionally an early customer or two.  Bank lines of credit may be available if entrepreneurs or investors are willing to guarantee the debt.

AW: What are the different avenues for funding available to a second-stage company?

Kathy Harris: Expansion and later stage capital has certainly been the largest part of the total funding mix over the last few years.  Money is plentiful for companies that need capital to grow beyond a critical mass of customers or bridge the gap between the early stages and an exit. Private equity sources, such as buyout groups or firms specializing in recapitalizations, are available for more mature companies as well as bank and mezzanine debt.  Additionally, hedge funds are becoming more prolific in the later stage arena which can bode well for entrepreneurs; hedge fund terms tend to be looser than traditional venture capital alternatives.  

AW: How is the market now?

Kathy Harris: The venture market is particularly strong for companies in “hot” areas such as new media, green technology, healthcare devices and biotech and open source software.  However, I’m convinced that great entrepreneurs and great companies can always find funding, no matter the economic cycle.  It’s unclear how the recent unrest in the institutional debt and financial markets will impact venture, but it will take awhile for any impact, positive or negative, to trickle down to the early stage market. 

AW: What advice would she give someone thinking about starting up a company?

Kathy Harris: I would talk to everyone I could possibly find who has started a company and managed it to a successful exit.  Starting a company and sticking with it through the challenging times takes an incredible amount of intestinal fortitude. The more you can learn about the process, the better you can appreciate the passion and commitment a start-up demands.