In preparation of our upcoming Venture Camp event, I had the opportunity of interviewing, Paul Matteucci, operating partner of one of the most respectable VC in Silicon Valley, USVP (2.7 Billion invested, 450+ companies)

Office culture shoot at USVPQ. Tell us who’s Paul Matteucci in a snapshot :

A. I have lived in and around Silicon Valley all of my life (born in San Francisco).  I have built a $1B business in computer storage interconnects and started a company that achieved IPO in 1999.  As a VC I have invested in companies in IT infrastructure, semiconductors, Internet, Adtech.  My best outcomes are Homestead, sold to Intuit, Trovix, sold to Monster, 3Ware, sold to AMC.  I am currently on the Board of several promising companies, including PlaceIQ, Dstillery, Swoop, Livefyre, Jeda Networks and others.  Check them out!

Q. How do you see the startup environment in Europe? Which countries/regions are most active?

A. We see considerable activity in the UK, the Nordic countries and a little bit in Spain and Italy.  In the East, we see US companies utilizing highly-skilled low cost technical resources from Poland, Romania and the former Soviet Union countries.  Outside of the US most of the activity is in Asia, including Australia and Israel, both rivaling US activity.  Next is Brazil and Western Europe.  After that, Eastern Europe, then Africa, the rest of Latin America, and the Middle East last.

Q. What’s the perception of the Italian startup ecosystem from outside?

A. Not much of an impression at all.  It is safe to say that Silicon Valley is oblivious to whatever start-up activity is taking place in Italy.  USVP, my firm has had one investment in Italy in the past 15 years and it was founded by a US entrepreneur.  It was located in Milan.

Q. How do you see the crowdfunding phenomena? How is going to impact the Sand Hill venture capital industry?

A. Crowdfunding is a new mechanism for start-ups the “democratizes” access to possible winners.  As long as people understand the risk/reward calculus, I see crowd funding as an exciting phenomenon.  I worry that at some point governments will get involved in regulating crowd funding to try to protect losses.  This will kill crowdfunding, if it occurs.  You can’t have equal access to upside if you try to protect downside for only a few.

Q. What are  the most frequent mistakes startups do?

A. The most frequent mistake is to focus on competition rather than market development.  Frequently I see start-ups engaged in competitive wars when nobody in the market is enjoying interesting revenue.  The biggest risks for IT technology start-ups are in priority order:

*   MARKET DEVELOPMENT

*   EXECUTION

*   WASTED SPENDING

*   INABILITY TO FOCUS

*   TECHNOLOGY (CAN THEY BUILD WHAT THEY POSIT)

*   COMPETITION

Q. What are  the most frequent mistakes investors do?

A.

*   DOUBLING DOWN ON INVESTMENTS THAT ARE MISSING OBJECTIVES

*   TAKING TOO LONG TO REPLACE CEOs WHO ARE FAILING

*   FOLLOWING OLD SUCCESSES RATHER THAN FINDING NE ONES.

Q. What are the aggregate financial returns you got investing in startups? Which is the best deal ever? And the worst?

A. In the aggregate we have returned 3x-ish capital to investors.  Great deals are 25X.  Worst deals invest more than $20M in a company that returns zero.

Q. What’s your main message you’d like to convey to angel and seed investors? And to startuppers?

A.

TO ANGEL INVESTORS:  The game is not VC versus Angels.  Both have an important role and we can work together.

TO Start-ups:  Not all money is created equal.  Do your diligence and figure out who adds value.