srsly disappointed by sand hill road series A/B VCs who tell our best co’s in Japan/EU/LatAm they need 2 move 2 valley 2 get checks. #lazy
— Dave McClure (@davemcclure) September 4, 2014
Many of the points in the discussion echo sentiment I have heard before, like: “It’s hard to add value in markets and languages where the firm does not have relationships”. This is why dedicated India, China and Israel funds exist, with people who operate in those markets. They enable Sand Hill Road firms to build out similar networks to the ones they have created in the Bay Area to source, evaluate and support the deals they do.
So should you move? Here are some things I think you’d want to answer:
1. Will a move help grow revenue? For B2C in the US, the answer might be yes because more media and so more awareness etc. For B2B in Germany, probably less so. For now. But if you are considering US market entry around series B, you probably want to have a US investor and then by the numbers there is a good chance your investor will be in the Bay Area. If you are building out in India, when is US expansion on the list?
2. Will a move help you access more talent? Taking our B2C and B2B questions at a simple level again. If you are Minecraft, you are doing just fine via the interwebs and raving fans, so no sales and marketing needs. And you have a Whatsapp size dev team, so you can probably lure people to where you are. But for many other companies there are questions about distribution partners or sales teams or larger engineering teams working on campuses. This is where Sand Hill Road can help (or NYC, BOS, DC, Boulder, Austin, etc.) can help you access the US market. And probably help generate a halo effect for you in other market like EU or LATAM.
3. Do you want to increase your options for an exit? I don’t think this gets talked about enough, but I believe it’s easier for corporate M&A to do deals involving companies that work nearby. I need to dig into the data more on this but on the surface, Sand Hill Road relationships are with some of the most active corporate acquirers. They tend to be in the Valley.
Will it give you more funding options? We skipped this one, because we think the numbers bear out the Yes! Excluding Valley investors, decreases your options. Getting a term sheet contingent on a move, seems like a great problem to have.