Top venture capitalists: How to be successful

10 VCs with proven track records share words of wisdom at the AlwaysOn Venture Summit

Last week AlwaysOn awarded the VC100 top-performing venture capitalists at Venture Summit Silicon Valley in Menlo Park, CA. We based the list on exit performance in the last four years, and it was a satisfying to see these dealmakers, many of them are limelight-shy and underhyped, recognized for their hustle.

Several winners were present at the conference, and AlwaysOn’s Tony Perkins circled the room Geraldo-style to ask for their secrets to nurturing successful companies. Here’s a summary of what they said:

“One thing I’ve found important is recognizing my place in the bus; I’m in the back seat, the management team is up front. One of the first boards that I sat on was Nuance, and I’d watch how guys like Yogen [Dalal] and Irwin Federman helped and coached a guy like Ron Croen. We’re excited about Twitter; that’s Evan Williams. We’re excited about Zynga; that’s Marc Pincus. We’re excite about Home Away; that’s Brian Sharples… I think the secret to success is find great management teams and then just recognize it’s their company and try to help them.”

- Todd Chaffee, Institutional Venture Partners

Notable Exits: Hands-On Mobile, Mobile365, ArcSight, comScore, Omniture, @road

“I always ask people if they live the digital lifestyle… You gotta understand where the world is going; otherwise how are you going to relate to the entrepreneurs who come into your office? […] Evolve, spend time with young people. It’s the people that matter and you gotta take risk […] If you don’t lose any money, you’re not doing your job for the LPs. You’ve got to make sure that at the end of the day, you come out positive, and in order to do that, you’ve got to take risks.”

- Yogen Dalal, Managing Director, Mayfield Fund

Notable Exits: PostX, BeVocal, Affinity Labs

“We try to get a lot of deep knowledge in spaces, and then be willing to invest in companies that have a great team, who have deep domain knowledge, and are the first of a kind. […] It’s hard to invest in something that’s the only one it its space, but if you’re right, you’ll win big."

- Mike Kwatinetz, Founding General Partner, Azure Capital Partners

Notable Exits: Bill Me Later

"It’s important for us to recognize that the best ideas that we’re investing in are going to come from the entrepreneurs, and not ever get carried away with the hubris that you can identify what the next big thing is, particularly in IT.

- Steve Krausz, General Partner, U.S. Venture Partners

- Notable Exits: Vontu, CipherTrust

“If you put together the right team, and that includes not only the team they built but the board team, […] the best venture boards usually have the best management teams, usually have the best partners, the best customers, and add the most value. They end up being the number one or number two company in that particular segment and that’s where most of the money’s made.

- Kevin McQuillan, Co-Founder and General Partner, Focus Ventures

- Notable Exits: DATAllegro, Centrality Communications, Kazeon Systems, Berkeley HeartLab, Matrix Semiconductor, Sandburst, inCode Wireless, eHealth, Aruba Networks, Virtusa, Infinera

“It’s really about backing great teams […] My litmus test has become when I go there with my long list of questions and concerns and worries and on and on, do you feel good, at least for a little while after talking with them?”

- Brian Ascher, Partner, Venrock

Notable Exits: Simple Star, DATAllegro, Adify, Unicru

“See opportunities where others don’t.”

- Woody Benson, General Partner Prism VentureWorks

Notable Exits: M:Metrics, Maven Networks, LogMeIn

“We’re focused. We believe companies should be focused and we’re a focused fund. We started in 1989 to only invest in software, and now six funds later, we’re doing the same thing.”

- Mark Gorenberg, Managing Director, Hummer Winblad Venture Partners

Notable Exits: Tizor, Omniture

“In our case, it’s looking at what are the medical needs that a lot of us are going to face today and in the future and then execute like crazy. Many folks assume it’s the science that at the end of the day wins or loses and makes the company a success or not, and in my experience is that it’s really the ability of the team to execute and work through issues that ultimately distinguishes a successful company from a failure.”

- Dan Turner, Managing Director, Montreux Equity Partners

Notable Exits: NovaCardia, Cerexa, Orexigen Therapeutics, Transcept Pharmaceuticals, NeurogesX, Somaxon

“I think it’s really not a transactional business; it’s about trust and shared passion. […] In addition to all the deal tracking mechanisms that we have, we also have a people-tracking infrastructure around finding EIRs and finding entrepreneurs."

- Larry Orr, General Partner, Trinity Ventures

Notable Exits: Aruba Networks, Bix.com

“You gotta have the guts the day you invest to have someone say, ‘what the hell are you thinking to invest in that?’”

- Gene Riechers, General Partner, Valhalla Partners

Notable Exits: RealOps, LeftHand Networks