It’s easy these days to get caught up in the mystique of the entrepreneur. The blogosphere has been in a tizzy over Jack Dorsey’s return to Twitter, eager to see if the founder can, like Steve Jobs before him, help to resurrect a company with the strength of his product vision.
“I think the problem is that a lot of young kids these days are drawn to the idea of being an entrepreneur, of the cool that comes with that title,” says Jay Levy, co-founder of Zelkova Ventures. “The big thing I am looking to avoid these days is someone who thinks startups are sexy. We like to invest in people who can geek out on the nuts and bolts of building a business.”
The critique of character cuts both ways. “If you don’t engage your investors and get more than money from them, you sold yourself short,” says Levy. There is no room, especially in the crowded field of early stage venture in New York, for a backer with a check book and hands off approach. Levy was as a product guy first, investor second. He got his start in high school building web sites, first for mom and pops, then for publicly traded companies. “That’s what I like to do, test out tools, tears things down and see how they work,” says Levy.
After college he spent some time at Morgan Stanley, where he worked on software platforms for the banking giant. His next gig, as one of the early employees at the consulting company MPI, ended when the firm was acquired by a giant financial services firm. The stake from these early experiences allowed him to start out on his own as an investor, first as an angel and then with Zelkova, which was founded in 2008 and works with a handful of LPs.
Zelkova’s portfolio has seen some early winners in its short life span. Nutshell Mail was acquired by Constant Contact and Ribbit, which raised $13 million, sold to British Telecom for $105. “I recently had an e-mail correspondence with a first-time entrepreneur about valuation. They requested pre-money of north of $100m, and I fell out of my seat. Luckily, our floors are carpeted, so it didn’t hurt much,” says Levy.
He is excited to see powerhouse VC shops like Accel setting up more established bases in New York. “There is a kind of a dumbell shape right now. A lot of early stage money here, and for the very late stage, the big banks which can fund big boys like Facebook.” With a few notable exceptions, like Union Square Venture’s Opportunity fund, this leaves a gap which forces local firms to head elsewhere for funding. “What we need is more meat in the middle.”