VC Spotlight Interview: David Cremin, DFJ Frontier
A special thanks to David Cremin from DFJ Frontier for participating in the LaunchHouse Venture Capital Spotlight Interview Series. Cremin is a founder and Managing Director of DFJ Frontier, a Draper Fisher Jurvetson venture capital fund focused on seed and early stage technology companies on the west coast. At Frontier, he leads fund management, fundraising and portfolio management efforts. Prior to Frontier, he was a founding partner of Zone Ventures in Los Angeles. As an entrepreneur, he served as founder and CEO of Vis-à-Vis Entertainment, a music publishing and digital media company. He also spent several years touring as a professional musician and recording for RCA Records, Atlantic Records, Elektra Records and EastWest Records. He holds a BS in Industrial Engineering from Stanford University.
How did you first get interested and involved in venture capital? What do you currently do on a day-to-day basis?
I got involved in venture capital in 1998 because I was lucky enough to be offered a position by my VC Tim Draper. We sold the assets of my startup, and Tim suggested I join a fund he had just started in Los Angeles. Fourteen years later I'm now on my fourth fund working with Draper. Day-to-day, my partners and I are focused on sourcing cool new startups, managing the ones into which we've already invested, and helping get liquidity for all stakeholders by selling the winners or taking them public. To effect that daily, I meet with new entrepreneurs every week, I engage with our current portfolio founders and CEOs, I speak with large, acquisitive corporations about their current interests, and I work with investment bankers and their analysts to understand the lay of the land.
It seems as if "failure" is becoming more accepted in the VC world. Can you share an experience in which you invested in a venture that did not succeed. Why were you optimistic about it at first and what happened?
The United States is known as one of the few places where failure can be embraced. In other cultures, failure simply isn't rewarded. In the U.S., entrepreneurs can lay it all on the line every day. If you don't experience failures, you are not pushing the envelope far enough. And with each failure, one learns valuable lessons on how to get it right faster, better, cheaper the next time. I have seen entrepreneurs fail and fail, and then finally succeed. I would say failure has always been acceptable in the VC world, especially in the Silicon Valley, which is still the center of the technology equity economy culture. In 1999, we invested in a company, which presented an online platform where a person would hold one's identity, and you update it yourself, and your contacts will know if you have changed status. The idea was correct. We had a committed entrepreneur. The company failed, but today you have the obvious successful replacements in LinkedIn, Facebook, etc. We were optimistic that our company had the right idea and it would spread "virally." We were right, but our timing was wrong. Our company ran out of money, as did many others in 2001 - 2003 when companies focused around the internet fell out of favor. Often it is about timing. You want to be early, but you don't want to be too early.
Is there a common myth that you hear from entrepreneurs that you would love to dispel?
Actually, it's important that entrepreneurs dream. Let the myths and magic continue.
What are the key qualities you look for in an investment opportunity?
Consistent margins, predictable repeatable customers and revenue, extensibility into other markets, and long-term defensibility.
What are some of the first steps you commonly take after adding a new venture to your portfolio?
Because we are seed stage investors, common first steps are (1) helping the founders think through how to measure important business metrics, and report on them in a way that we and other VCs appreciate and (2) establishing very clear goals to be achieved with the capital invested.
What are 3 things entrepreneurs should never say to a VC or Angel Investor?
"Now that I just finished pitching you, are you ready to write the check?"
"If you fund me, I will leave my current, safe corporate position"
"I'll call in two weeks, after I return from vacation"