Featured Network Partners: Microsoft BizSpark

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Featured Network Partner

Company: Silicom Ventures
Interviewee: Tal Behar, Executive Director

Silicom Ventures is where real high-tech, smart money, and entrepreneurs meet. This Microsoft Network Partner is one of the largest angel and venture capital investment forums in the United States, linking experienced investors with entrepreneurs from around the globe. Based in California’s Silicon Valley, this firm’s influence spans North America, Europe, and Asia. It has investments in life sciences and medical technology, semiconductors, software, and media.

Q: Tell us about Silicom Ventures and your focus on Startups?

We started in 1999 to provide funding to breakthrough early stage companies. Through the years, we've grown to be one of the largest angel and VC forums in the U.S. Our members include successful entrepreneurs such as, Dan Maydan, Steve Wozniak, Tom Baruch, and over 250 other members who are retired or active executives and VC investors. To date, we have had several successful acquisitions and IPOs. We work closely with our portfolio companies to get them to the next level. In addition, we have organized and produced hundreds of domestic and international events; some sponsored by foreign governments, and some by us. We assist these participating Startups in making connections and meeting with strategic investors, potential partners, and clients. In the past five years we held events for China, Mexico, The Netherlands, Spain, and Israel. The four-day summit in Israel included tours of local Israeli companies by more than 100 U.S. investors and was attended by 800 Israeli entrepreneurs. The next Silicom Summit will be held in Israel on June 2010.

Our next local large event is the first-ever conference on personalized medicine in Silicon Valley— it will be held on January 19-20, 2010 at the Computer History Museum. Personalized medicine is emerging as the single-most significant development in health care in the 21st century. PMWC2010, a two-day educational and business conference, will examine the status of this promising field and the challenges of transforming the industry. I’m mentioning it here because we think it’s a good time to get Startups and entrepreneurs involved in this field. There's even a competition to select the most promising Startup. As many of these Startups could benefit from the BizSpark program, we’ll allow them to sign up right there.

We also organize bootcamps for entrepreneurs. In fact, for years we have been listening to elevator pitches and often find that entrepreneurs in the fund-raising mode make the same mistakes and have the same misconceptions about starting businesses. As a guiding tool we developed bootcamps for entrepreneurs — a series of interactive sessions that lines up expectations with reality. Each camp will include about 30 entrepreneurs, each interactive session includes topics such as typical mistakes made in business plans and executive summaries, how to set valuation, typical mistakes when presenting to investors, ways to improve oral presentation skills and more.

Q: What makes you different—what is your key differentiation?

Clearly, we have the Israeli connection, and deal flow coming from there. We also have the connections and the experience that our members bring. We help early stage companies who are struggling by providing experience, money, and guidance. It's not like you just write a check and that's it. It's a continuous process. Preferably, the companies are local so we can really be hands on, and work with them.

Q: How did you first hear about the BizSpark program?

We heard Microsoft CEO Steve Ballmer talk about the program back in May when he gave a speech at Stanford University. He talked about the opportunities in this difficult economy, and how Microsoft was helping Startups. That triggered us to look further into the program, and sign up.

Q: What kinds of things are you hearing about the benefits of the program?

We hear from our Startups that it's an excellent program, especially in this environment where funding is tight. Our member portfolio companies are finding that the BizSpark program allows them to stretch their development dollars further and do more with less. In fact, we think the MSDN resources and the other software tools that come with that are great. Since we joined the BizSpark program in June, we have already signed up more than 70 Startup companies.

Q: Are there any Startups that we could highlight that really point to the success of your venture business?

There are a number of them, but I would just focus on one—Yoggie. They received two rounds of investment from our members, and were established in 2005 by Shlomo Touboul, the inventor of behavior-based blocking technology. Touboul started Aladdin, which is a very successful Israeli company. With Yoggie, he developed the world's first hardware-based, personalized security computer solution. Yoggie develops and markets a USB key that you put into your laptop and it blocks Internet threats. They're already selling their product in stores, and making great progress.

Q: Given the current economic climate, do you have any advice to give to Startups?

Due to the tough economic situation and the scarcity of funding, entrepreneurs need to be more resourceful and creative in running their companies and raising funding. VCs are busy supporting their existing portfolio companies and are unwilling to fund new companies, especially if there is no indication of customer traction. Companies should make as much progress on their own and postpone approaching the VCs until a later stage. This means doing more with less, using outsourcing and paying with equity. Many Startup companies these days operate as virtual companies—outsourcing work to overseas contractors via the Internet. And this requires that projects be very well defined and specified, so an independent contractor can work on it and deliver what was required without going through many feedback cycles. Regarding the funding, companies need to be more flexible, and willing to accept lower valuations, and consider bridge loans and multi-tranche investments where each stage is contingent on milestones. Companies should also look for strategic partners who may be willing to fund some of the development, and should recruit board members and advisors who have clout and connections in the financial community and who can help in fund raising.

Q: On a scale of 1 to 10, with 10 being the highest, how would you rate the program?

I would give it a nine. It is a great program at the right time when the economy is challenging. Microsoft made it really easy for entrepreneurs to sign up and use the tools at no cost.

For more information, contact Tal Behar at talb@silicomventures.com.