AN INTERVIEW WITH THE FOUNDERS
Clint Chao and Brian Connors
Q: Why did you start Formative Ventures?
A: After working at several venture-backed start-up companies, we observed that
entrepreneurs lacked a choice for a “back to basics” VC firm whose
partners had the firsthand experience of establishing a start-up. We’ve
been blessed with the experiences of growing companies from pre-revenue stages
to established industry leader, several times over. For this reason, we
can complement an investment syndicate with a set of skills that goes well beyond
financial support, and help navigate a company from the start-up stage to industry
leadership stage. With our combined executive backgrounds in sales and
marketing, we felt that we could really add value to help our companies succeed. It’s
the passion that we both have for this investment approach that led us to launch
Q: What is the climate like for start-ups to get investments today?
A: It’s doable, but tough. The good news is that the demand for technology
advancement continues to provide opportunities for entrepreneurs to make an impact
on an industry. The recent nuclear winter in the tech market should have
everyone, from entrepreneurs to investors, making sure that they are building
and betting on the right teams with the compelling technology to go out and influence
a market. We’re happy to see a lot of start-ups forming, but there
will be no easy path to success. You want to make sure you find the right
syndicate of investors who can help you as you navigate the road ahead.
Q: What does Formative look for in its portfolio companies?
A: We look for companies that are developing revolutionary technologies, but with
the timing, skill and management team that can generate evolutionary revenue
ramps. Markets simply don’t form overnight – it takes a bottoms-up
approach to win key influencers in the market that get the ball rolling towards
industry adoption. If you pick the wrong early adopters, you might be on
the road to doomsday. We’re looking for companies that can show us
that they are attacking a large addressable market, but they also need to convince
us that they have the ability to influence a marketplace.
Q: What technology areas are you interested in?
A: We like companies that can solve real world problems in mobility, connectivity
and Internet usability. While we have a deep domain expertise in areas
such as advanced semiconductors, EDA software, wireless, video and communications,
we look at all areas of technology that can solve some of these important problems. We
specifically look for talented technical teams that we can complement with our
seasoned sales and marketing skills.
Q: What are top things I should look for in a VC?
simple: You need to find a VC that you can trust, and one that can
align their interests with yours. Make sure that in addition
to the individual venture partner, that you also feel good about the
firm behind that partner. You’re going to be spending every
single day for the next 5+ years together with a common goal in mind,
so look for a group with whom you can easily communicate. The
venture industry has also gotten largely collaborative, so make sure
that you find the right combination of skills from a group of VCs that
you need to build your company as you raise your money. We think
it’s paramount that you have an investor in your syndicate that
has been in your shoes before.