Lightbank partner Paul Lee tweeted his thoughts on Day 2 of Big Omaha, his first trip to the conference.
As the Silicon Prairie News team pored over the Big Omaha 2012 attendee list in the days leading up to last week’s conference, one thing that stood out was a spike in the number of venture capitalists attending the conference from outside SPN’s three-city region of Des Moines, Kansas City and Omaha.
It’s one thing for funders from within the region to attend a conference in their own backyard, and we’ve seen that happen fairly frequently during Big Omaha’s four years. It’s another thing altogether for VCs to travel halfway across the country for a conference, and we were curious why there was an uptick in that this year at Big Omaha.
Plus, in the last year, Big Omaha 2011 speaker Marc Eckō had made investments in Dwolla and Zaarly, a pair of startups with Silicon Prairie ties. Eckō, who’s based in New Jersey, said his decision to invest in both companies was driven in part by encounters with their founders at Big Omaha 2011. So we began to wonder if other similar relationships would be forged here in 2012.
We endeavored to find out by sitting down with a few of the VCs who attended last week’s conference. In separate interviews with Paul Lee (left), a partner at Chicago-based Lightbank, Jacob Mullins, a senior associate with Shasta Ventures of Menlo Park, Calif., and Steve Schlafman, a principal with Lerer Ventures in New York, I got the perspectives of VCs from outside the region regarding the Silicon Prairie and its startups. Below is a sampling of snippets from those conversations.
Motivations at Big Omaha
All three VCs said they were interested in scoping out startup activity outside of traditional tech hotbeds, and all expressed a belief that there’s a shift underway in how and where funders find deals.
“More and more of these hubs are going to start sprouting up,” Lee said. “And we’re realizing that there’s a lot of talent here. So we want to be early on the ground.”
Said Mullins: “I think there’s just a ton of companies and people who are doing really smart things that are not in California or New York, and you don’t have to be in California or New York. I think that’s kind of what traditional venture capitalists have thought and that companies will just walk through your own door … and I think that’s just not the case anymore. So I’m being more proactive and going out to different places where there seem to be hotbeds and bubbling areas of companies and smart people.”
Schlafman said he’s found one such hotbed while doing extensive work in New Orleans, and he tries to make similar discoveries by diverging a bit from the well-traveled path between Bay Area and Big Apple.
“The rules of the game are changing,” Schlafman said. “The cost to start a company has gone down dramatically, and who’s to say that … the next great company isn’t going to be from here?”
Regional startups on the radar screen
Lee declined to discuss details of companies from the region that Lightbank is tracking but said he planned to meet with 12 startups over the course of two days in Omaha.
Mullins and Schlafman both said they came to the Midwest without any particular agendas or specific startups they planned to meet.
“I came here with a completely open mind,” Mullins said. “What I was looking to do is just meet a bunch of great people who are working on stuff out here.”
Schlafman (left) wound up holding office hours on Friday, but in a Thursday interview he echoed Mullins’ sentiment about having an open mind. “For me it was just, like, this is a chance to see an entirely new community,” Schlafman said. “And what you realize is that different communities have different advantages, and they sort of thrive at different things. And so for me this was just an opportunity to come and get educated and sort of see what is driving this community.”
Deal flow from tech conferences
Each of the men had a slightly different take on the value of tech conferences, but all three seemed unanimous in their preference for fishing for deals at relatively smaller conferences over hunting for startups at events like South by Southwest Interactive.
“Conferences (are) an important part of our strategy in terms of deal flow, but frankly I don’t attend that many,” Lee said. “Our analysts, our principals do go to the major ones and things like that, but I actually find real value in conferences that are slightly under the radar as it relates to the tech community. But here, this is like the perfect conference in the sense that it attracts the best talent as it relates to the area, but not a ton of tech investors know about it. So for me that’s the ideal breeding ground.”
Schlafman said he attends 4-5 conferences per year and, from a productivity standpoint, prefers smaller events because they led to more focused interaction. “One of the downfalls of a lot of conferences is that … it’s almost too impersonal. I’m a big advocate for a move to smaller, more intimate events.”
State of Silicon Prairie startups
All three men were paying their first visits to Big Omaha. And all three had been in town for less than 24 hours when they sat down for interviews. But all offered some qualitative takes on the region’s startup scene at first blush.
Lee said he saw “some very talented entrepreneurs that are thinking about the products and the business in the right way but aren’t necessarily as up to speed in terms of the language of investment — meaning, the things you would need to show in order to attract capital, what areas to focus on in terms of looking at it from an investor’s perspective. But you can see that, as it relates to the service or the product and the team building that, there’s a lot of quality there and there’s a lot of focus, so that’s really encouraging to see.”
Mullins (left) said he was impressed by the sense of positive energy and collaboration he got from the Midwestern entrepreneurs in attendance at Big Omaha. “It’s just, like, honest excitement about meeting each other and hearing about what new people are doing,” he said. “So that kind of just unlacquered feeling is awesome. It’s really unique.”
Building an ecosystem
Again prefaced by the disclaimer that they were outsiders looking in Des Moines-Kansas City-Omaha region, all three men offered perspectives on what can be done in the region to create a climate more conducive to the growth of startups.
Mullins emphasized attracting and retaining certain kinds of talent.
“What I think could help … would be more just kind of consumer product type understanding and people,” Mullins said. “I’ve been here for 16 hours, so I don’t really know that much. But it’s developer talent around just relentless focus on consumer experience. Right now, that seems to be the key to a lot of the big companies getting attention, getting user attraction, getting funding now, is beautiful user experience.”
Lee took a different approach, focusing on successful startups as a way to create strong ecosystems rather than the other way around.
“I think I’ve always thought promoting an area as an area of success and entrepreneurship is a little bit like putting the cart before the horse,” Lee said. “I always think success begets success. So, you know, rather than focus on the ecosystem, I really do think a big success in the area will end up pulling other people up and giving demand for that kind of lifestyle and career for others. So I think what’s going to spark huge success here is, you know, a company like Dwolla or other companies that start achieving a level of success that other people can start emulating.”