This January was the 78th Entrepreneur’s Roundtable. The latest installment in the monthly pitching series that continues to be an informal class of 101 in entrepreneurship, was held at the Microsoft headquarters in Times Square and this month’s VC was Joshua Siegel of Rubicon Ventures. In addition to the opportunity to get facetime with the VC, attendees were the first to know that the Entrepreneurs Roundtable Accelerator 2015 Summer program will start taking applications in two weeks.
So now you know, too.
There was a second guest this month as well. Charles Sacco from Drexel University’s Entrepreneurship program waxed poetic about the program’s virtues: it’s the first 4-year degree in entrepreneurship amongst leading universities, and this institute for higher learning happens to be only 90 minutes away. It also is dedicated to exposing students to more NYC VCs.
VC of the Month
Joshua Siegel took to the proverbial stage about his background being an investor back in the days when it was really “gritty” with “no business model of any kind.” He became an angel investor in 2007 with the formation of Georgetown Angels and then a professional venture capitalist in 2012.
Siegel wasn’t always a VC. He attended culinary school and intended to become a professional chef. Plans change and after a stint in historic real estate development – not to mention getting his MBA from Georgetown University, he moved into investing. His current fund, Rubicon, is located in NYC and San Francisco and includes 19 investors worldwide. They focus on getting revenue, and developing strategies for their portfolio companies, which included Today Tix, Navady, and NodePrime.
They don’t lead deals, instead partnering with the likes of Sequoia Capital. Rubicon doesn’t invest in LLCs, only C-corps formed in Delaware, Texas or California. Unlike some funds, they do allow their LP’s to invest beside them. They currently have a $25 million fund to be distributed to 40 to 50 companies.
The Investor in the Hot Seat
Next came the questions from the audience:
Question: At what point do they like to see companies be cash positive?
Answer: They’re not worried about profitability. VC funding is the revenue model and they’re more concerned with the startup building up engagement and user base.
Question: What are Rubicon’s requirements before they invest? That you’ve raised an initial friends and family round, you or your co-founder is a technical person, and your idea is unique and the company is gaining traction.
Another audience member asked about the pros and cons of convertible notes vs. equity rounds. (A quick primer on convertible notes not explained at the time: Money loaned to a startup that converts into stock after series A and later rounds of funding.)
Answer: “We like convertible notes,” when it’s done right, he said. When you raise money on a note, it doesn’t incur valuation; it’s flexible, in that you can change it. Equity rounds require board involvement, the IRS, and are more expensive to hire a lawyer to execute.
With Siegel’s glowing review of convertible notes another audience member astutely asked what are the downsides to convertible note. Answer? There are barely any, except for its misperceptions that you’re not in equity, which “you are if it’s written well enough.”
For a full listing of upcoming events for the NYC startup and tech community, please visit the AlleyWatch NYC Tech and Startup Event Calendar.