LiveWorld Transcripts

Talk City presents

Cisco's VP of Business Development, Ammar Hanafi
Business Plans and the VC World

March 14, 2001

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Miller: What should I look for in a VC/Funding source?

Ammar Hanafi: I think in this environment, finding venture capital partners that have a lot of experience in different economic environments is essential, because of the turmoil in the market. Therefore, my first piece of advice would be to find somebody with a lot of experience in the business environment, and who understands how to help companies be successful through different kinds of markets. Secondly, I would say find venture capitalists that have money to give.

Monica: What is your opinion of the current incubator climate? I am hearing that they are dead – then, I hear differently.

Ammar Hanafi: The market for incubators is one that is based on high expectations for companies being created by the incubator. As the environment around pure business-to-business or business-to-consumer Internet companies has changed, the expectations of the companies being incubated in incubators has also changed, and this has resulted in a less positive outlook on incubators. Therefore, that is the fundamental issue with incubators. In the end, if incubators create businesses of great value, they will be highly valued, but because the expectations of value have gone down, the value of incubators has gone down.

Gonet: How many VC's should I distribute my business plan to? The more the merrier? Or should I limit the number?

Ammar Hanafi: Each company and founder will have its own strategy in terms of how to approach the venture capitalists. My strategy would be to focus on a group at a time, and make sure that you approach the venture capitalist you want most, later in the process, after you have practiced your pitch. My suggestion would be to do as many venture capitalists as you need to raise your money, but do them in sequence, and not all at one time.

Dan: If I have been turned down by several VC's, what other avenues of funding can I seek out?

Ammar Hanafi: I would suggest if venture capital funding has not been forthcoming, try and take the feedback that the venture capitalists give you to improve your business plan, and also, the community of angel investors who maybe make more sense than approaching the venture capitalist community directly at this point. Approaching the Angel Market is usually a first step for a lot of companies, before they approach venture capitalists, and maybe that's the right answer for you. The Angel investor community has some organizations that are organized, like a band of Angels in the Silicon Valley area; otherwise, each geographic market tends to have it's own group of angel investors. I would advise you to find the community of angel investors in your community by talking to the Chamber of Commerce, or other local business sources, like lawyers, or accountants.

Net Creator: Where can I go for a critique of my business plan? I want to make sure I am putting my best foot forward.

Ammar Hanafi: As I mentioned earlier, the first thing is to make sure you practice with many different venture capitalists, before you approach the one that you really want. Secondly, refine your business plan by talking to business advisors that you trust, and have some understanding of the market. So lawyers and accountants, again, are good places to get advice.

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