320 ENTREPRENEURSHIP
not uncommon for a third party to be involved in the negotiation. The third party is
generally some sort of specialist in resolving impasses and disputes and helping negotia-
tors come to terms. Figure 8.3 illustrates the possible elements present in any negotia-
tion.Much More Than $$$
Jim Fowler says the venture capital firms that
invested in previous start-up companies at
which he was an executive were never very
involved in day-to-day management. In con-
trast, he says that investor El Dorado
Ventures is “incredibly involved” in Jigsaw
Data Corporation, the Internet start-up Fowler
founded to permit salespeople to trade busi-
ness contacts online.
Fowler reports that he speaks several
times a week with someone from the venture
capital firm that put $2.5 million in Jigsaw,
and that there’s an almost constant exchange
of emails on operational matters, analyst
reports, and business referrals. Fowler
understands the reasons behind the
increased contact: Venture capitalists “have
to justify their investments,” he observes, and
so “they spend a lot more time on them.”
“During the bubble, everyone spent time
on technology, and they totally ignored the
other aspects of business,” explains Phil
Soran, CEO of Compellent Technologies, a
computer storage start-up. Compellent has
been working on issues like career develop-
ment and executive succession with its own
venture capitalist investors. “If you don’t
have good management, it’s going to bite
you,” says Soran.
El Dorado has hosted management-train-
ing sessions to benefit the start-ups they’re
funding, including Jigsaw Data. The VC firm
hired Dell Larcen, a professional manage-
ment consultant, to offer specific advice on
finding, interviewing, and hiring top candi-
dates for key management jobs. Fowler usedwhat he learned in those sessions to suc-
cessfully recruit a new vice president for
engineering. “Without a doubt, we would
have gone through a less rigorous process”
without that training, he reports.
The consultant that El Dorado hired says
she is getting more calls from venture capital-
ists to provide this kind of help for start-up
companies. “The pressure [on investors] to
get results now is much greater,” she says.
El Dorado has already seen its handhold-
ing approach pay off with other ventures.
“The most important thing to an entrepreneur
isn’t getting the money, it’s getting a partner
you can work with who will do the heavy lift-
ing,” says Jim Steeb, former Senior Vice
President of Access Health. In 1988 Access
Health was a small company providing over-
the-phone medical advice from nurses as
part of a hospital marketing program. With
seed funding and management support from
El Dorado, it has catapulted to $100 million in
annual revenues by switching its market
focus and now provides that service to insur-
ance companies. McKesson/HBOC acquired
the start-up for $1 billion in 1998. Repeat
business indicates the VC’s management
touch is appreciated; Steeb is one of a group
of “returning entrepreneurs” who have gone
back to make deals with El Dorado to invest
in their second or third new technology start-
up.
SOURCE: Adapted from Rebecca Buckman, “Baby
Sitting for Start-Ups,” The Wall Street Journal, March 13,
2006; B1. Retrieved from the Web. http://www.eldorado.com.STREET STORY 8.2