Dec 23, 2013 10:54 AM EST
Mark Glennon has maintained a passionate avocation in economic development and job creation over a thirty year career in venture capital, consulting and law. He is Managing Director at Ninth Street Advisors, providing consulting services to high growth technology companies and their investors. From 2001 to 2010 Mark managed venture capital investments for Leo Capital Holdings. Recent board of directorship service includes GrubHub, Shoutlet and FunMobility. He is the founder of WirePoints, an online news site, a member of Hyde Park Angels and a Mentor at TechStars, an incubator in Chicago. Droid Report recently interviewed Mark Glennon about his current role, discussed views on VC funding today, insights on mobile, innovation and more.
Mark Glennon, CEO of Ninth Street Advisors
Droid Report: Ninth Street Advisors provides consulting services to high growth technology companies and their investors which you are currently Managing Director. Can you tell us more about your role and some insight on the company’s initiatives for 2014?
Mark Glennon: I plug particular experience gaps that growing companies sometimes find they have, either alone or as part of teams I assemble tailored to the particular need. Typically, a client has good core tech talent and a product taking off, but is taking on new tasks where they have no experience, like a VC round, a partnership strategy, or maybe a new, ancillary product.
Personally, I usually focus on capital raising, business development and market strategy. Big data expertise has been in high demand, so I’ve brought in data gurus on several projects. I expect that demand to continue in 2014. Advertising technology is also a focus and I work along with specialists in that. Ad tech seems to get more complex by the day, requiring sub-specialists sometimes. I expect to be working on small teams on several ad tech projects in the next few months.
Droid Report: Can you elaborate on the consulting services to high growth technology companies that you provide?
Mark Glennon: I stick to things I believe in enough to invest in, to preserve credibility with my contacts, so I generally work half for cash and half for equity. I like payment for results and not billing by the hour, so relationships are terminable at will and very flexible. The tech community is collegial and honorable, especially in Chicago, so that works fine and entrepreneurs appreciate the approach. I usually am working with about three companies at a time.
Droid Report: Why is having the perfect team so important to VCs?
Mark Glennon: Because VCs know that execution risk on key hires is shockingly high. Just hiring the wrong head of sales, for example, can easily set you back by a year, when you add up time to recruit, hire, fire, then recruit again. And bad hires are far too common – over 30%, I would guess.
Some investors very deliberately “bet on the jockey not the horse,” which has some empirical basis. But it’s probably more emotional than that. Nobody wants a lover who 'drives them crazy,' and it’s sort of the same thing. Investors have learned the hard way that dealing with bad leadership is horribly draining — time consuming and emotional — aside from losing your money.
Actually, a full team needn’t always be in place. Just one or two proven founders can be enough to win VC confidence if they’ve had prior success.
Droid Report: According to a recent post by Stanford University, “Angel investors now supply the overwhelming majority of high-growth startups with their first money after the founders have tapped family and friends.“ As a seasoned investor yourself Mark, what is your own view on how entrepreneurs can find and work with angels?
Mark Glennon: That’s always been hard. Most of the answer is smart networking:
If you have no network or aren’t good at it, find somebody who is and who believes in you, and give them a few option shares in exchange for helping you.
Target respected people in your field who you can convince that “you really have something,” even if they are not investors, because they carry lots of weight with investors.
Try to talk to angels, VCs and others who are known to be generous about sharing their connections with other angels. You get lots of ‘no’ answers from people who just aren’t the right fit but will send you to somebody who is.
Test out your pitch first with a couple “friendlies” who won’t bad mouth you if they find a hole in your story.
Avoid getting labeled as already “shopped around.”
Don’t employ a finder known to be just a hired gun who doesn’t believe in you. Instead, find somebody who does, and either hire him or put him on your advisory board. Sell him a few shares or pay him with equity.
Droid Report: Stanford’s post also states “Look close to home.” “Most angel investments are within 50 miles of the investor, and angel networks are often in geographic clusters, like Silicon Valley and Boston. “ Do you agree?
Mark Glennon: Yes. Most angels want personal contact. Many are more do-gooder than you might think — they’re partly motivated by ‘giving back’ and by a funny kind of paternal or maternal instinct, but that only works if they meet you live and like you.
That said, some angel groups and small VCs are very good about bringing in co-investors from other cities. For example, I work with Hyde Park Angels in Chicago, and they are quite systematic about working with other angel groups and small VCs from other cities to split or refer deals.
If you’re in a smaller city and need to go to a larger one to find angels, I suggest you somehow convince them that you and some of the team are “there all the time anyway,” so distance is not an issue. That is, maybe you have a major customer in the angel’s home city, or a couple remote employees there, or the founders all have family there. Whatever. As long as the angel knows you’ll be in town regularly to meet up, that will help.
Droid Report: The success of traditional angels has spurred a new breed of “superangels” or “micro VCs.” Do you feel today’s Angel Investors are fast evolving?
Mark Glennon: A few trends there. First, the strategy of making many investments in small amounts is more common. I haven’t yet seen data on whether that strategy works better, but if it proves out it will become still more common. We’ve seen superangels, some nationally known, pop into Chicago and drop maybe $50k - $100k on a few companies with almost no due diligence, and that’s certainly new in the last few years. They often rely on angel groups or incubators for sourcing and due diligence.
Second, there’s less “dumb money” around. In years past I was often horrified by some things that got funded and by stupid deal terms. Doctors were seen as especially gullible. Things have changed because there’s more angel know-how around, and sensible terms are now mostly standardized.
Finally, angels, groups and VCs do tend to move upstream, shunning concept-stage ventures in favor of those with traction, so concept-stage funding remains especially tough.
Droid Report: What advice would you give for today’s Android startups looking to attract venture capital?
Mark Glennon: First, beware that investors often ask themselves, “is this an app or a company?” You need to be a company. And your company must be centered on products and not services (which most investors shun). Present yourself as a big play with a sustainable strategy beyond selling an app or two alongside developer services. You may think that’s not rational because some companies do get rich off one app, and we all know how Android market share is surging, but the fact remains that investors still ask that question.
Second, show traction by proving up unit economics before you talk to investors, even if you only do it on a small scale. That usually means showing how much customers are willing to pay, your margins, cost of customer acquisition and lifetime value of a customer. If those numbers are good, convincing, and scalable you should be in very good shape.
Droid Report: Is there anything else you feel Android users and the Android market should know?
Mark Glennon: I’m concerned about balkanization among operating systems. That, is, Apple, Microsoft and Google aren’t playing nice -- on ease of interoperability. I hear that from developers and I certainly see it as a consumer. For example, good luck trying to sync contacts and calendar from an OS X device with Mavericks to an Android device. Heck, you now can’t even sync them from a MAC with Mavericks to MS Office for Mac!
While that makes development more challenging, maybe it’s an opportunity, too: I expect that frustrated consumers using multiple systems will be willing or forced to pay up for apps that take some pain out of interoperability.
We would like to thank Mark Glennon for taking the time for this discussion and Ninth Street Advisors.
Ninth Street Advisors provides advisory services to emerging companies and their investors in - market analysis and due diligence - capital raising - business development - operations and growth strategy - interim management - turnarounds and liquidations From later stage companies down to concept stage ventures, Ninth Street Advisors can provide either hands-on manpower or confidential advice to drive revenue, efficiency and valuation. We know how to raise money, whether through institutions, angels or private placements -- equity or debt -- and we have deep relationships with those sources. High growth companies are our specialty, but we know how to get turnarounds and liquidations done when things haven't worked out.
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