Seed Capital From Angel Investors: Mike Hirshland, General Partner, Polaris Ventures (Part 4)

By guest authors Irina Patterson and Candice Arnold

Irina: On average, from all your sources, how many applications do you personally get per month?

Mike: That’s a good question. Hundreds.

Irina: Out of those hundreds, how many deserve a closer look?

Mike: I would say maybe 8 to 10 are worth pondering to some extent. The others you can quickly funnel off as hasn’t hit the bar to spend any time on at all.

The quicker you can get to that point, the better. You know, 8 to 10, I think you pause to give some consideration. Of those, we only have time to look at a handful, you know, three or four. Of those, some months you’ll pick one and really dig in hard and give a very serious look, and some months you won’t.

Irina: How many meetings do you actually have with entrepreneurs per month?

Mike: Oh, boy. Maybe 40 or 50. They’re not all necessarily pitching us. That’s kind of how I spend my day is meeting with entrepreneurs of all different flavors.

In many instances, there’s a whole bunch of people who are in a category of just great entrepreneurs. Maybe they’re currently working at a Facebook or Twitter or Zynga or an unfunded startup.

They’re men and women who are really smart and know what’s happening to net good visibility and interesting trends, interesting people. So, we work really hard at spending time with them to be our eyes and ears and help us understand and discover the most interesting people and things.

Irina: I see. So, you just go around and have informal meetings with different smart entrepreneurs, not necessarily those who are pitching you?

Mike: Correct. In many instances – I would say the majority of instances – it’s a relationship like that that we have with entrepreneurs who are not fundraising, but at some point down the road, they will be fundraising and have gotten to know us really well through this informal exchange of ideas and people and opportunities. Then, when it comes time for them to raise, they knows us, we know them. There’s a good relationship, and they just reaches out and says, “Guess what? Now we’re raising. Want to sit down and have a chat?”

So, about half of my meetings are fundraising, and half are just talking to entrepreneurs in the trenches. And then we also spend a moderate amount of time with the strategics. We’re always trying to understand what the strategic players in the space are looking for, whether it’s to inform our investment VCs or whether it’s to connect the dots for portfolio companies that may have a business development opportunity. We’re always working the senior management at the Googles, Microsofts, and Facebooks.

Irina: Those all make up the 40 to 50 meetings that you have each month?

Mike: Yes. And then there’s just spending time with our portfolio companies, whether it’s a board meeting or it’s working with them around strategy, product, recruiting, and team building. That’s an entirely separate category. That probably is at least as much as all the rest added together.

But, it’s very important to always be having a steady diet of new meetings because it’s from someone you’ve never heard of and never met that you discover a great idea or a great deal or a great opportunity. So, it’s pretty important to make sure you’re doing a healthy stream of first meetings.

Irina: When you talk to people and look at different businesses, what are the most critical factors?

Mike: There’re just two big obvious ones. You have to be convinced – you never know this – that the opportunity the entrepreneur is chasing, if she succeeds, is a really big one. That’s an immediate screen.

We get lots of pitches. Sometimes [they’re] compelling entrepreneurs [with] very good ideas and, sometimes, really impressive products. But when you step back and say, “Okay, let’s assume we succeed. How big is this? Is this a very large market, and potentially you could build a very valuable business?” The answer is, no. It’s a neat product addressing a real pain, but it’s just never going to be that big, and that’s an immediate threshold.

The other thing that is a little bit less straightforward but absolutely critical, is the entrepreneur himself or herself. People say this again and again, but at the end of the day, you back people. And despite the best-laid plans, I think virtually every successful startup has had major shifts in direction and strategy. It’s always important to be pretty excited that there’s something special about the entrepreneur you’re backing.

This segment is part 4 in the series : Seed Capital From Angel Investors: Mike Hirshland, General Partner, Polaris Ventures
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