the incentives.
Livingston: What would you tell an entrepreneur to understand before he/she
meets with a VC?
Kapor: I try to explain how it works. There are more choices nowadays for
people—angel money, for example. And many things are much less expensive
to do now. You can go further on your credit card than you could before. I want
entrepreneurs to make informed choices when it comes to financing. Understand
what the impacts and implications are for different financing options.
Livingston: Plus, many people don’t need to have as much money to get something
started.
Kapor: You can also do some interesting things in a seed round of $100,000 to
$200,000 and it’s available on very different kinds of terms.
Livingston: Did you ever do anything to seem more impressive to investors?
Kapor: I’m pretty terrible at artifice; I don’t play poker for that reason. But
there’s one thing I did. When we were raising money, I hadn’t heard from the
VCs (Ben Rosen and L.J. Sevin) for a long time, and I was worried. So I got a
call from L.J. (he’s from Texas)—“Mitch, I’m in town. Would y’all like to get
together for dinner tonight?”
So I made a reservation at the fanciest French restaurant in Boston and
raced home to change from my jeans to a suit, and we came to dinner. I ordered
a very expensive bottle of wine, and I knew he was paying for it, so I was kind of
stepping up here like, “This is serious, so I hope you’re serious.” I wasn’t feeling
like French restaurant, three-piece suit, expensive wine. And he’s making small
talk through the appetizer course. I was thinking to myself, “If he doesn’t get to
the point when they have the main course, I’m going to ask him, ‘Are you doing
this thing or not?’” Because I knew that we were out of money. And finally at
the end of the appetizers—about 45 minutes, but it seemed like all night—he
said, “Mitch, Ben and I would like to invest in your company. How much do
y’all think it’s worth?” And I dropped my fork, like a cartoon.
Livingston: How much did you tell him?
Kapor: I think I said probably $2 to $3 million. We had nothing. We had an
early-stage under-development spreadsheet, and me and Jon Sachs. So that was
the biggest number I felt I could ask for without being totally absurd.

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• the incentives.