360° Coverage : Need VC Cash? Find A Big Market With A Big Problem

2 Updates

Need VC Cash? Find A Big Market With A Big Problem

Apr 23 2014, 10:56am CDT | by

For many entrepreneurs the ways of venture capital investors have all the transparency of a mystery wrapped up in enigma. What’s not in doubt is that VC Funds have the resources to provide...

Filed under: news

 
 
 

25 weeks ago

Need VC Cash? Find A Big Market With A Big Problem

Apr 23 2014, 10:56am CDT | by

For many entrepreneurs the ways of venture capital investors have all the transparency of a mystery wrapped up in enigma. What’s not in doubt is that VC Funds have the resources to provide transformational funding at levels that wouldn’t normally be available from a bank or angel investor. But if you’re an ambitious entrepreneur with a good story to tell, what’s probably a lot less clear is whether your business will tick enough boxes to tickle the fancy of anyone within the venture capital community.

So what makes a business attractive to VCs and other equity investors? Identity management company Okta has raised a total of $79 over a number of funding rounds so when cofounder and COO Frederic Kerrest was in London recently, it seemed like a good opportunity to ask him how his company has done it.

Find a niche but make sure it’s a big one 

Scale matters, of course. “VCs want a big market, so if you’re looking for investment you need to focus on a big and also a growing market,” says Kerrest.

If you’re lucky, of course, you might find yourself in a clear blue ocean of untapped demand but Okta is a software company providing identity management services and as Kerrest acknowledges, this is a field in which companies such as Oracle, IBM and CA have long-standing expertise.

So the key for Okta has been to identify a niche within that market. As Kerrest sees it, the opportunity was created by rapid changes in the way companies are using IT. For one thing, businesses of all sizes are happily embracing the BYOD(Bring your own device) philosophy by allowing employees to access applications and information via a range of personal smartphones, tablets and laptops. This in stark contrast to an earlier time when any machine with access to network was owned by the company and probably sat on a desk. Added to that we have seen the growth of cloud computing and also more sharing of information between companies. All three of these trends have created new requirements in terms of identifying and authenticating users. In Kerrest’s view, the established players in the identity management marketplace haven’t reacted quickly enough to the changing environment, creating a gap that Okta has been able to fill.

Room For Disruption

“That’s another important factor as far as investors are concerned,” says Kerrest. “They like to see that there’s room for disruption.”

That disruption extends to the emergence of a new and hitherto largely untapped customer base – namely small and medium sized companies. “SMEs have adopted cloud services particularly aggressively ,” says Kerrest.

Managing Expectations   

But if growth potential is a hugely important factor in attracting investors, so is a degree of realism. “When you’re talking to investors it’s very important that manage expectations. You say, this is what the business will look like, but it has to be credible,” says Kerrest. “You stick with the basics and say this is what we’re going to do in the next six months or the next 12 months.”

Setting and hitting ambitious if realistic targets creates the milestones that open the door to further growth funding. For its part Okta, has gone through a number of funding rounds the latest of which being a $27 million series D deal led by Sequoia Capital with existing investors Andressen Horowitz, Greylock Partners and Khosla Ventures also taking part. The money raised will enable Okta – which has grown to company with 300 employees and 500 customers – to press ahead with an expansion into Europe.

Choosing Your Investors 

Multiple funding rounds can create their own potential problems, not least in juggling the interests and expectations of an expanding group of investors. As Kerrest sees it, it’s important to select investors who “understand each other.”

And equally important, choose investors who provide something in addition to money. “Ideally, you want investors who are operators – people who know what it’s like to run a company and who can add value,” he says.

Businesses in the UK arguably a face a tougher time in securing VC capital than their counterparts in the larger US finance market but Kerrest believes the verities are largely the same. The key is to find that big market. “And make sure you’re solving a big problem.”

 
Update
2

7 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

7 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

New polio case reported in Pakistan
Islamabad, Oct 18 (IANS) A new polio case has been reported in Pakistan's Khyber Agency, bringing the total number of cases detected this year to 200.
 
 
Ebola screening counter set up at Pakistan airport
Islamabad, Oct 18 (IANS) The Pakistan government has set up a facility at Islamabad airport to scan passengers coming from African countries for Ebola, media reported Saturday.
 
 
Beckham keen to help Ebola victims
London, Oct 18 (IANS) Former footballer David Beckham has joined the fight against Ebola, calling upon the world to help "collectively halt" the "ferocious" illness.
 
 
New technique to make biofuel production cheaper
"The synergy between the palladium and the iron is incredible," said lead researcher Yong Wang from the Washington State University in the US.
 
 
 

Latest from the Network

Bush shoe-tossing painting hits record at Doha auction
Doha, Oct 15 (IANS/EFE) A controversial painting by Iranian artist Mahmud Obaidi, depicting an Iraqi journalist throwing shoe in 2008 at then US president George W. Bush, was sold for $62,500 at a Sotheby's auction in...
Read more on Celebrity Balla
 
US offers $45 mn bounty for eight terror leaders
Washington, Oct 15 (IANS) The US said Tuesday it is offering rewards totalling up to 45 million dollars for information on eight key leaders of the Al Qaeda in the Arabian Peninsula (AQAP) terrorist organisation. The...
Read more on Politics Balla
 
UNSC extends peacekeeping mission's term in Abyei
United Nations, Oct 15 (IANS) The UN Security Council (UNSC) has renewed the mandate of the UN peacekeeping mission in the Abyei border region between Sudan and South Sudan. In an unanimously adopted resolution, the...
Read more on Politics Balla
 
Ebola cases in West Africa could reach 10,000 per week: WHO
Geneva, Oct 15 (IANS) The World Health Organisation (WHO) has warned that the Ebola epidemic in West Africa could reach 5,000 to 10,000 cases per week by the first week of December. "Quite frankly, ladies and...
Read more on Business Balla
 
Turkey, Singapore sign strategic partnership agreement
Ankara, Oct 15 (IANS) Turkey and Singapore have signed a strategic partnership agreement to boost economic, political and cultural cooperation, as well as security collaboration, during the official visit of...
Read more on Politics Balla
 
Christina Aguilera is returning to 'The Voice' USA
Christina Aguilera will return to 'The Voice' USA next year. The 'Your Body' hitmaker, who previously shared a rotating spot on the judging panel with Shakira, has been replaced by Gwen Stefani this season as she is...
Read more on Celebrity Balla
 
Kesha's music producer hits back
Kesha is being countersued by her record company boss, Dr. Luke. The 41-year-old music producer, who runs Kemosabe Records, claims the 27-year-old 'Tik Tok' singer is a liar and is trying to extort him after she accused...
Read more on Celebrity Balla
 
Jason Derulo won't get back together with Jordin Sparks
Jason Derulo insists his split from Jordin Sparks is permanent. The 'Talk Dirty' hitmaker, who recently ended his relationship with the 'No Air' singer after three years of dating, has ruled out getting back together...
Read more on Celebrity Balla
 
Josh Groban feels 'very lucky' to be dating Kat Dennings
Josh Groban feels ''very lucky'' to be dating Kat Dennings. The 'Brave' hitmaker was very nervous before singing in front of the '2 Broke Girls' actress for the first time at the Carousel of Hope Ball in Beverly Hills,...
Read more on Celebrity Balla
 
Australian Richard Flanagan wins 2014 Man Booker prize
London, Oct 15 (IANS) The first Man Booker prize to allow American nominees was Tuesday night won by an Australian, with Richard Flanagan triumphing for a novel of love and war that tells the harrowing stories of...
Read more on Celebrity Balla