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August 11, 2007 – Venture Capital with Brad Feld

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Rob:

Welcome to Startup Story Radio. I’m Rob McNealy, your host. Today in the studio we have special guest host Bob Arciniaga. We have a great guest on the air for you today as well, Brad Feld. He is a famous VC, venture capitalist, and we have a lot of stuff going on. Little bit of homework. Just want to say we’re moving stations next week. We’re moving to our sister station KKZN. 760 AM from 3 to 4 PM. It’s going to be a great move for us. It’s going to be a really wonderful show. We’re changing our format a little bit. Also, we’re taking calls today: 303-713-T-A-L-K. That’s 303-713-8255. Call us. We want to hear your story. I’d like to bring Brad on. Brad, can you hear us?

Brad:

I can hear you fine. Thanks for having me.

Rob:

Great. How are you doing up there in Boulder today?

Brad:

Having a great day.

Rob:

Well, I’m glad you came on the show. I think that you have a great bit of advice and a great bit of information that you can give to our audience. I would like to hear from you and ask you a few questions. Can you explain to me-I’ll just jump right in here. Can you explain to me and our audience what is a VC?

Brad:

Well, a venture capitalist is typically somebody who invests money in companies of wide variety. They can be technology, software, Internet or life science, biotechnology, or even consumer products companies, or services companies, with the goal of helping-working with entrepreneurs to actually create a substantial company. VCs invest a full range, from early to late, so you get a wide variety of different definitions of what a venture capitalist is.

Rob:

Now, as an entrepreneur, why would I want to go to a venture capitalist?

Brad:

VCs provide a couple of things. One is obviously capital to help you get your business up and running. If you need capital that is more significant, you can raise from friends and family and other angel investors. Typically, a VC is the best option. Second, depending on the type of business you’re creating, if you can hook up with a venture capitalist, or VC firms that understand your industry, and have deep networks and ties to whatever markets you’re trying to develop, they can often help very actively with the business in terms of the actual creation of the business.

Rob:

So, would you recommend-say I’m a startup and I got this great idea, for an Internet.com whatever, and I’ve exhausted all my family and friends and I’ve mooched off my neighbors, sold the cat and hocked the kids-why would I want to go to a VC versus an investment banker or VSPA or where does a VC kind of fit in to all that?

Brad:

Sure, an investment banker typically won’t be of much help in this scenario you described. Because they are typically facilitating transactions where they are either helping buy or sell companies or raise money for companies but they’re not directly investing in the companies. The VSPA, is a different type of program If what you’re looking to do is build a small company and raise a relatively amount of incremental capital, then the VSPA might be a good source for you. If you’re actually aspiring to try and create a significant business, then a venture capitalist is probably a better source.

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