Getting Funded: VCs Go Head-to-Head With Start-Ups at TechCrunch40

At this midday panel, TechCrunch40 co-host Jason Calacanis moderated a discussion with Jay Adelson (Digg), David Sacks (Geni), Roelof Botha (Sequoia Capital), Sumant Mandel (Clearstone), George Zachary (Charles River Ventures), Hank Barry (Howard Rice), and Jeff Clavier (SoftTech VC).

(Quick aside: Before the panel begins, the woman sitting next to me is investigating the contents of the TechCrunch40 schwag bags, which apparently include AOL CD cases recovered from an intern-led archaeological dig at the company’s Dulles, Md.Va., campus.)

After introductions, Calacanis poses the first question to the VCs on the panel: How does somebody best get into your office?

Mandel: A referral or introduction from a colleague.

Zachary: An introduction or a very simple email.

Clavier: Introductions, but he admits–perhaps foolishly–that being mobbed at conferences does sometimes work. (Start-up pig-pile on Jeff in the Demo Pit everyone!)

Botha: Likes the simple email idea as well.

Calacanis asks Adelson about his approach to raising capital. “Do you just call the same people and ask for money?” Adelson says you seek out capital from the people most likely to offer it in support of the business you’re pitching.

Same question asked of Sacks. He says Geni did its series A round as an idea and its series B as an actual product. Suggests aspiring entrepreneurs focus their early efforts on the refinement of your idea and your vision. That’s the best way to guarantee a good VC valuation.

Question: How do you determine valuations? Is it all based on your perception of a start-up as bankable and the idea of owning the next five years of its life?

Mandel seems to agree that there’s a logical aspect to these decisions, but insists that there’s also an emotional one as well.

Botha agrees and notes the recent insanity around Facebook’s valuations.

Clavier, a long-time angel investor, then announces a $12 million seed fund. Its focus will be the consumer side of the Internet, with a few dozen deals, ranging from $100,000 to $500,000, over the next 3 years.

Question from TechCrunch40 co-host Michael Arrington: Wonders if VCs are peeved that the angels are swooping in and taking companies that they would have liked to fund away from them.

Botha says of course. But adds that this all contributes to the ecosystem of innovation, yadda, yadda … competition is desirable. ….

Panel descends into pure VC 101 tedium. And then ….

What’s the stupidest thing an entrepreneur has done to get your attention?

Clavier: Clipping your nails during a meeting.

Clearly the high point of the panel. Time to find coffee.