Venture Capitalist Lays It All Out

March 9, 2010 § 2 Comments

MSGL students recently enjoyed a visit by Ted Alexander, a partner with San Diego-based VC firm, Mission Ventures Capital. Ted gave a fascinating look at the basics of venture capitalism and how VC firms partner with start-up companies to build their profitability for mutual benefit.
Ted began by walking us through a hypothetical case in which an entrepreneur starts with $1M, progresses to build his company’s value to $5M and negotiates with a VC firm to bring an additional $5M into the company. Ted explained that the VC would make certain demands in return for (now) 50% ownership of the company. Then he explained the likely steps in getting additional capital to build success upon success, to eventually create a $1B company – which would be a professional and financial success for all concerned. In conclusion, he quipped, “And I wish it always worked that smoothly.”

According to Ted, about 1/3 of the companies with VC funding will ultimately fail. Another 1/3 are not failures, but not real winners either. The final third are very successful and are able to make enough money to recoup any investment lost with the other companies (and hopefully more).

Ted shared some thoughts about his own views on leadership, some of which he learned in the Navy, and subsequently applied in business. He strongly recommends the book, The Five Dysfunctions of a Team by Patrick Lencioni. He described his personal journey to find his dream job after graduating from Business school through networking, persistence, serendipity, and his ability to capitalize on opportunities that came his way. He has been in the VC business for 13 years now and clearly finds the work invigorating, though demanding.

He concluded his remarks with his personal method of keeping his life on track. He sets specific goals in the four main areas of his life: Personal, Professional, Physical, and Spiritual. He writes his goals down and posts them in a visible spot where he checks himself against them regularly and has others help hold him accountable.

Special thanks to Ted for sharing his personal story with us. The session was recorded and is available in streaming video for our distance learners and others upon request.

Ted Alexander is a Managing Partner of Mission Ventures III and has been with the firm since its founding. Prior to joining Mission Ventures, Ted worked closely with a successful Mission Ventures portfolio company investment, Sandpiper Networks.

Ted’s investment focus has been predominantly in the areas of communications and infrastructure, and he is currently serving as Board Director for Carbon Micro Battery, MaxLinear, ID Analytics, Networks in Motion, Ortiva Wireless, Verimatrix, and LeisureLink.

Previously, Ted was a Platoon Commander in the US Navy SEALs and a Division Officer aboard a US Navy destroyer. Ted received an MBA from Duke University and a Bachelor of Science in Engineering from the United States Naval Academy.

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