BK: Dynafund has had quite a few great successes recently, including your own blockbuster, in eToys. What do you attribute your recent string of successes to?
TH: I think creating a successful VC fund requires (1) an ability to attract the best deals, (2) an ability to pick the right opportunities, and (3) an ability to actively help companies succeed. At DynaFund, my partners and I all come from diverse backgrounds so together we have been able to build a very broad and strong network of relationships from which to cultivate our deal flow. Since we all have different areas of expertise such as engineering, marketing, manufacturing, finance, etc., our firm is also able to evaluate opportunities from a variety of different perspectives. We've also tried to closely monitor markets so that we can identify and bet on emerging trends like e-commerce, storage area networking, etc. earlier than most people. And finally, when we do invest, we work hard to make ourselves available to our companies and help them with whatever they might require including management advice, financing, recruiting, strategic partnerships, etc.
BK: Do you think the recent upsurge in VC deals here in Southern California has changed how entrepreneurs deal with you? And if so, how?
TH: For the most part, the recent upsurge has had a positive influence because entrepreneurs seem more knowledgeable about how to get a VC's attention, how to properly structure a company, how to present an idea, etc. On the negative side, however, there seems to be a lot more entrepreneurs these days who have unrealistically high expectations about their company's worth.
BK: Are you finding good prospects here for future investment?
TH: I think Southern California is a great breeding ground for start-ups and we've run across a lot of good prospects. My expectation is that this is only going to get better over time as people who are involved with today's successful companies decide to spin-off and launch their own start-ups in the future.
BK: Where do you see Dynafund and other VC funds here in So Cal going in the next few years? Do you think we'll ever get the kind of density they have on Sand Hill road?
TH: Southern California is a lot more spread out than Silicon Valley so I don't think you'll ever see the kind of VC density around here that you can find at one location such as Sand Hill Road. I do believe, however, that you will continue to see a rise in the number of VC firms in the area and an increase in size from the already existing ones such as DynaFund.
BK: Finally, what advice would you give local entrepreneurs who are looking for attention from VC funds such as yours?
TH: Wow, this could be a long list. I guess one point I would stress is that VCs are usually all flooded with business plans so try to get an introduction from someone who knows the VC so that your plan can get to the top of his or her pile. Also, target the right VCs. For example, some VCs like early stage Internet deals while others like later stage health care deals. Make sure you know what the firm likes before you pitch them. And finally, fund raising always takes longer than you think so make sure to plan ahead and budget your time appropriately.
BK: Thanks for the great insights!