How Long Does a Startup Take to Exit? MuckerLab’s William Hsu Gives an Investor’s Perspective

When an entrepreneur is looking for funding for their company, Silicon Valley has typically been the go to spot to grow their startup- them and every other entrepreneur in the world it seems. But recently, LA’s startup scene is growing, providing a different setting as well as culture to entrepreneurs looking to establish their company in Southern California. To meet the opportunity and demand, venture capital firms like Mucker Capital come into play.

Los Angeles based Mucker Capital was founded by William Hsu and Erik Rannala who combined have executive experience working for big name companies like AT&T and eBay and have extensive backgrounds in entrepreneurship and venture capitalism in Silicon Valley. Now, they are taking their skill sets to LA’s startup scene with their seed stage funding firm Mucker Capital and their pre-seed stage fund MuckerLabs, which has raised over $65 million to fund all 18 of their startups so far.

We had the chance to pick the brain of co-founder William Hsu over email where we discussed how the LA scene is different from Silicon Valley, how long the average company takes to sell off, and how entrepreneurship is the new trend for the best and brightest minds.

You guys recently launched Mucker Capital, tell us a little bit about that and the differences between what you guys do at MuckerLab?

“Mucker Capital invests in companies at the seed stage with investments ranging from $150K to $500K, while MuckerLab is an accelerator and invests in companies at the “pre-seed” stage. For both, we bring our operating experience and network to help our entrepreneurs maximize their chances of success. In the MuckerLab program, our companies typically work out of our office space for up to 12 months. During that time, we have the opportunity to embed ourselves deeply into the daily operations of the business and impact the trajectory of the business in a hands-on manner.”

What are the notable differences you notice between the LA startup space and Silicon Valley?

“The LA startup ecosystem is certainly smaller than the Bay Area but offers broader diversity in the markets within which the startups are targeting. LA has a larger and more diverse economy than the Bay Area and that is reflected in the types of startups that are produced here. We are seeing more often in LA than in the Bay Area entrepreneurs with domain experience in the industry they are tackling.”

What are some things the LA startup scene needs to improve on that Silicon Valley and other places do better?

“Los Angeles lacks indigenous capital sources at all stages. It’s important for LA to eventually have a vibrant venture capital community at all stages so our startup ecosystem can be more vibrant.”

Tell us the most ridiculous startup idea ever pitched to you guys.

“I would not call it ridiculous, but it’s just that some people don’t really understand what we do, especially since venture capital is not a common profession here in LA. So occasionally we get people pitching us reality TV ideas. They might be great ideas, but we are completely unqualified to evaluate their merits or help take them to fruition.”

What are some things entrepreneurs need to take note when looking to seek funding from a company like yours?

“The most important thing an entrepreneur needs to show is an inclination for action over planning. If an entrepreneur has an idea, the first thing to do is to figure out how to incrementally make that idea a reality and get feedback from the market in any way possible.”

Please share your most memorable failure and how you overcame it.

“At the age of 22, during the height of the dot-com bubble of the late 1990s, I started a B2B Internet company with a couple friends. We were able to raise about $50M in venture capital, but we barely knew how to manage and grow a company. By the time the stock market crashed in 2001, we had a large user base but a hugely unsustainable burn rate and no path to break even in the near future. My board was right in replacing me with more seasoned executives. I spent the next ten years of my life learning how to build a company at all stages – starting with business school, working as a product manager at eBay, and eventually running my own P/L at AT&T. I bring the experience of starting my own company as well as the years learning how to build businesses from the ground up to help our entrepreneurs to grow their companies.”

What is something you feel many young entrepreneurs today don’t get?

“Many young entrepreneurs don’t understand that the average company takes seven years to build to some sort of “exit,” and, as a result, the biggest gamble that an entrepreneur takes is actually the opportunity cost of working on another idea or in another company. Before they truly commit to the business by raising capital from VCs, they should really understand all the risks and assumption of the business as well as decide if they are truly passionate about the business they are building. Seven years is a very long time – invest in yourself wisely.”

As mentors, what is your most favorite advice to give to entrepreneurs?

“It’s a bit trite to say now in the age of “lean startups,” but I continue to push the entrepreneurs to spend more time with customers and users.”

Lastly, tell us the trends in the startup world that you both are most excited about and why.

“The trend I’m most excited about is that for the current generation of college graduates, being an entrepreneur is becoming as prestigious of a career path as strategy consulting, medical school, law school, and high finance. Twenty years ago, the brightest and the best minds were becoming doctors, lawyers, and sometimes finance geeks. Today, many are choosing to build their own businesses. The engine of growth for the future of the United States will increasingly be new business formation, and I’m incredibly fortunate to play a role in supporting these entrepreneurs.”

Feature image via YouTube

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