Two Hours at Highland Capital

Anyway you slice it, getting a meeting with a leading VC is tough, and getting to spend an hour plus is almost impossible. Yet as members of the BC Grad Tech Club and the overall BC Community, we have had the great fortune of having it become almost commonplace.  Only a few weeks ago, we were able to spend an hour with Spark Capital’s Bijan Sabet, and a number of our student entrepreneurs recently discussed business ideas 1:1 with Highland General Partner and BC Alum Peter Bell.

Last Friday was no exception as a group of us were fortunate enough to spend almost two hours in Highland’s Cambridge office on the top floor of One Broadway.  BC Alumni Dan Nova and Chris Protasewich hosted us, answered our questions, and dropped some serious knowledge.  While my notebook contains several pages of scrawled notes, I’ll do my best to distill it down to my impressions of a few key takeaways.  A huge thanks to Dan and Chris as well as the whole Highland team for being such staunch supporters of the school and our programs!

highland

Key Take-Aways

On what type of companies they look for and fund:

  • Highland is looking for revolutionary companies that seek to reshape an entire industry such as Uber with transportation, HourlyNerd with Consulting, and Rent the Runway with high end fashion.
  • This requires founders with big ambitions who are a little bit crazy.  In often cases, these are people with goals to start a movement or reinvent the future.  For successful entrepreneurs, opportunities to make a few million by selling early can be hard to say “no” to but can also hamper the potential of a company.

On Highland’s People First Approach

  • Highland evaluates opportunities with a People, Market, Product, and Deal Terms approach-in that order.  They sees themselves as selling a relationship based on trust and value-add and therefore the most important element is people.
  • Highland looks for solid, smart, and hard-working people.  They believe that if they find the right people, they will be able to adjust successfully to the changing market.
  • Of more than a thousand meetings each year, Highland will only fund about 15-20 companies after a great degree of due diligence on the people.  As Dan says, “There is no substitute for time when you are investing in a relationship.”
  • They look for people who can communicate well and honestly even when its bad news.  In Dan’s words, “We make a living dealing with bad news.”  Highland has a lot of experience and can often recognize patterns that allow them to provide sage advice as long as the founder comes to them honestly and in time to take action.

On Corporate Venture Funds

  • Dan is not personally a fan because there is often a disconnect in alignment between them and companies like Highland.
  • Corporate Venture groups move less slowly and they usually have a strategic interest that can alter the natural course of business development.

On Continued Investment

  • Highland recognizes that companies often require more than one infusion of cash, as a result they set aside a dollar for every dollar they invest initially to be used for further investment.  This allows the company to continue to support its portfolio companies as needed.

On the Future

  • “We are in the Golden Years of Major Marketplace Shifts.”  Transport, Housing, Fashion, Consulting, are all being rocked at the core and Dan believes this will continue to take place.  There are a lot of entrenched but ridiculously inefficient industries out there and the market and technology is now prime for disruption.  We can expect to see a lot more of this.
  • Immersive 3D Virtual Reality is here and will be huge.  Dan believes that the moment is here though he admits he is awfully bullish on it and my may be a bit early
  • VCs do not know all.  In an admirable moment of self honesty, Dan also admitted that VCs have a lot of experience and insight but certainly do not know all.  He asked about what are the most popular technologies on BC’s campus and was surprised to hear the anonymous social app Yik Yak was among the leaders.  He admitted he isn’t big on the anonymous thing, calling it “…the stupidest thing I’ve ever seen,” but appending his statement with “but I said that about Twitter…”

David LoVerme is a 2nd Year MBA at Boston College and the President of the Grad Tech Club

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