There is no one-size-fits-all definition of what “early stage” means and it varies among industries. Typically, it means a VC firm is either the catalyst for starting a company or the first, and often only, institutional investor. Early stage investing involves a few other key themes detailed by Brady Bohrmann of Avalon Ventures.

1. Defining Early Stage
Investing
by Brady Bohrmann,
Partner at Avalon Ventures

2. About Brady Bohrmann
Brady has over 20 years of experience as a venture capitalist and
operating executive in both information technology and biotech. His
focus is on early-stage investments and backing talented entrepreneurs.
Throughout his venture capital career, he has worked with over 75
companies. He currently is a director or observer of many Avalon
portfolio companies, including Backupify, Chart.io, Cloudant, Inc., Conjur,
Indix, Juliet Marine Systems, Kaltura, Kinvey, Memrise, Nanigans, Pingup,
Redbooth, Selectable Media, Simulmedia, The Happy Cloud, Twinstrata
and Vook.

3. One Size Doesn’t Fit All
There is no one-size-fits-all definition of what “early
stage” means to us, and it varies between industries.
Typically, it means we are either the catalyst for
starting a company or the first, and often only,
institutional investor.

4. Early Stage Investing
Involves 3 Key Themes

5. 1. Thesis-Driven Investing

6. Thesis-Driven Investors
As thesis-driven investors, we seek out opportunities
that align with our point of view on emerging markets.

7. Thesis-Driven
Patterns
We look for patterns and target
waves of innovation and change
that are both large and timely.
Over the years, we’ve pursued a
diverse set of these, ranging from
digital media to Internet
infrastructure, consumer services to
technology, and cloud-enabled
services.

8. an example
When Avalon Ventures first invested in Cloudant in
2008, the idea for the company had originated with
three MIT physicists who were moving around multi-
petabyte data sets.
Frustrated by the tools available for managing and
analyzing large amounts of data for their research, the
founders built a distributed, fault-intolerant, globally
scalable data layer on top of the Apache CloudDB.

9. example (cont.)
Their vision for Cloudant fit neatly with our thesis
that cloud computing represents a major shift in
computing infrastructure and increasingly will be the
preferred delivery method for software and systems.

10. 2. Backing and Building
Early Teams

11. Company Creation
We’re attracted to the company
creation process where small teams
of people are attacking big
problems and opportunities, often in
unorthodox ways.

12. Team Building
Successful founders and managers, from first-timers
to repeat entrepreneurs, are driven, relentless, and
able to recruit and retain great people.

13. an example
One of our portfolio companies,
Simulmedia, was founded by a serial
entrepreneur, Dave Morgan, in 2009.
Previously he founded TACODA and
Real Media, demonstrating an uncanny
ability to attract and motivate highly
diverse and talented teams of people.
Simulmedia is a product of online and
data methodologies and lessons
learned from Dave’s prior companies.

14. 3. Risk Management vs.
Risk Taking

15. Risk Management Defined
We consider ourselves risk managers, not risk takers.
As early stage investors, we are willing to take on
investment risk for the potential to gain a multiple of
invested capital; however we need to be convinced
that there is a big data idea in play and that there is
something special about the company and its ability to
execute.

16. Risk Management Partnerships
Avalon has a thirty-year history of creating life
sciences companies.
Recently, we partnered with Glaxo Smith Kline to
fund ten new companies. GSK looks to Avalon to
source, launch, and oversee the development of
these companies, which GSKs financial development
contributions significantly reduce the financial and
development risk inherent in early stage biotech
companies.

17. Risk Management in Action
The first company launched from our collaboration
with GSK is Sitari Pharmaceuticals, which is
developing ways to combat celiac disease.
Sitari was sourced by Avalon and is based on
intellectual property licensed from the Stanford
University lab of Charles Khosla.

18. Over 100 Investments Later
Spanning many technology boom and
bust cycles, Avalon has:
• Doggedly stuck to its focus of
investing in the early stages of
company creation
• Stuck to the exact strategy that has
helped build great companies and
consistently driven top-tier returns to
our investors.

19. Learn more!
Visit http://avalon-ventures.com/blog for more actionable advice
on early stage startups, VC funding and other entrepreneurial tips.