As a regular feature on the Forbes Midas List of top tech investors, Roelof Botha is a big deal. As a partner at venture capitalist company Sequoia Capital, Botha has helped fund some of the great names in tech today.
Sequoia has funded heavy hitting tech players such as Apple, Google, YouTube, PayPal, Cisco Systems, Oracle, Electronic Arts, Yahoo!, Kayak, Meebo, Admob, Zappos, Green Dot and LinkedIn.
Before joining Sequoia Capital in 2003, Botha was the Chief Financial Officer of PayPal, negotiating its sale to eBay for US$1.5-billion. He currently sits on the board of some of the hottest startups today like Eventbrite, Square, TokBox, Tumblr, Evernote, and Jawbone.
Botha truly does have the Midas touch as Forbes’ list suggests. He made an early bet on YouTube, which was later sold to Google for US$1.65-billion. More recently, his investment in Instagram doubled in value in a few days after he invested at a US$500-million valuation when Facebook snapped it up for a whooping one billion dollars.
He’s an investor in other startups like Unity Technologies, a company that helps developers build 3D games, and interestingly Gene Security Network, a company that helps doctors give couples the best chance of having a healthy children via in vitro fertilisation.
Botha is a fan of emerging markets, stating that he is impressed by the “entrepreneurial spirit” in countries such as Israel (if that can be classified as an emerging market). He also believes that the next Silicon Valley will emerge from Beijing or Shanghai. The African-born venture capitalist reckons that thanks to the financial crisis the “future of the world is increasingly in so-called emerging markets”.
Memeburn: What do you look for in a startup?
Roelof Botha: I look for the personal passion of the entrepreneur, their ability to describe the problem/need the address articulately, and the clarity with which they can explain why they have a unique and compelling solution to the problem.
MB: What puts you off when looking at a startup for possible investment?
RB: Unnecessary hyperbole and polish — I much prefer raw authenticity
MB: How do you decide how much money you’re going to invest in a startup?
RB: Based on how much the company needs to build its business over a certain horizon to meet certain key milestones/objectives. e.g., if the company plans to move from initial launch of a product/service and wants 18 months to hit certain key milestones on distribution and revenue that might inform how much money is required to fund that runway.
MB: Which successful companies did you say no to?
RB: More than I am willing to admit to! (We do not disclose this publicly, but let’s just say that our misses is one reason to always keep us humble!)
MB: Do you rate tech knowledge or business savvy more in a startup you’re investing in?
RB: At the outset, technology knowledge. It is hard to implant tech DNA after the fact. And when it comes to investing in the US, you really need a technology edge to give yourself a good chance of thriving.
MB: Do you think emerging market regions will be able to create their own Silicon Valley with similar success?
RB: I am sure innovation will blossom around the world, given that the internet and mobile platforms enable innovators anywhere in the world to reach a global market with ease. I’m sure other successful hubs of tech innovation will emerge, but matching Silicon Valley’s success will take time (at least a few decades, in my opinion)
MB: What country, outside the US, impresses you the most for its startup and entrepreneurial zest?
RB: Israel has incredible entrepreneurial spirit and a deep bench of technology talent.
MB: Where will be the next Silicon Valley?
RB: Most likely Beijing or Shanghai
MB: What are your thoughts on investing in emerging markets?
RB: I believe there are significant opportunities, as long as countries create the right framework for business formation. That includes protection of intellectual and other property rights, a solid and predictable legal system, efficient bankruptcy processes, minimal red tape for new company formation, etc.
MB: Do you think the financial crisis make emerging markets a more attractive investment destination?
RB: In the long run, yes. The deep fiscal problems that run through Europe and the US, coupled with unfavourable demographic trends (low birth rates, ageing populations) mean that the future of the world is increasing in so-called emerging markets.
MB: Which of the BRIC countries is the easiest market to crack? Which one would you invest in?
RB: At Sequoia, we have opened offices in China and India, and we have made a handful of investments in Latin America/Brazil.
MB: How is social integration changing ecommerce?
RB: Social enables word of mouth at an unprecedented scale. it’s most powerful effect, through reviews and recommendations, is to put product quality and value for money as the key to success in commerce. Social brings a level of transparency that prevents marketers from advertising their way to success without underlying product quality.
MB: You sit on the board of Square, do you think mobile payment solutions can be as successful in Africa as it has been in the US?
RB: Absolutely! Electronic payment acceptance is very high in the US, and I believe democratizing access to electronic payment (vs cash) for small business will resonate all over the world.
MB: Do you think the PayPal model of payment could be replaced by a purely mobile option.
RB: Potentially, yes.
MB: People are increasingly bypassing the web, downloading apps on tablets, mobile devices and PCs. What does this mean for the web?
RB: These services are all ultimately still web services, they are just being accessed on non-PC devices. We call this the “post-PC” era of mobile and touch devices. Even when software resides on one’s phone or tablet, the truth is that many of the applications still depend on a back-end server infrastructure somewhere in a datacenter. It does mean applications have to be built to be resilient to intermittent vs. continuous connectivity. But that is also true for many PC applications (e.g., outlook).
MB: Will there be a web in the next 10 years?
RB: No doubt.
Image: Brian Solis.