Consider this: Venture capital funding is often responsible for taking startups from the napkin sketch and slide deck stage to products and services that disrupt their respective industries and deliver handsome returns. Yet according to the National Venture Capital Association, out of every 100 business plans pitched to VCs by entrepreneurs, only about 10 will get a second look, and only one of those will score funding.
To make things tougher on founders, total venture capital investments for the first three quarters of 2012 were $20 billion into 2,661 deals. A MoneyTree report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters estimates that this year will fall behind 2011’s total of $29 billion investments in 3,906 deals.
Good thing Chi-Hua Chien, a general partner at the Silicon Valley-based investment firm Kleiner Perkins Caufield & Byers, doesn’t heed such trends. Chien, whose investments have backed companies like Klout, Spotify, and Zaarly, has a simple investment philosophy. “I usually have a strong gut reaction within the first 20 minutes,” he explains. That’s how long it takes him to get a clear read on whether the entrepreneur has an incremental view versus a revolutionary vision. “My tendency is to invest in entrepreneurs who have extremely clear visions and can see around corners to where the market is heading.”
His colleagues at KPCB seem to share this uncanny knack for singling out the next big thing(s). Codecademy, Fisker, Nest, Path, and Spotify are among the firm’s more recent investments. Since its establishment in 1972, KPCB’s backed more than 500 ventures, including a host of digital enterprises from AOL and Amazon to Zynga, along with life sciences companies such as pharmaceutical juggernaut Genentech and greentech pioneers like Recyclebank, a loyalty program for people to cash in on everyday conservation. No wonder KPCB’s been lauded as a standout among the clutch of VC firms that line Sand Hill Road…