As NextCorps continues to grow, so does our staff and support for entrepreneurs. We’re excited to have Dan Dykens joining our team as an Entrepreneur-in-Residence. Although Dan is a serial entrepreneur, he also has a wealth of experience in finance. In fact, he’s helped to invest more than $1 billion in tech companies. This combination gives him a unique perspective when working with founders on challenges — from market entry to securing funding.
Dan was named one of Boston’s 40 Under 40 Rising Business Stars by the Boston Business Journal in 2007. He was also nominated for Emerging Innovative Company of the Year Award by the Massachusetts Technology Leadership Council, and he’s a Founding Member of the Notre Dame Business Council.
Get to know more about our new EIR, Dan Dykens:
How did you become an entrepreneur?
[DD] My first career was in finance. I worked for two hedge funds in Greenwich and Rowayton, CT that had $720 million and $550 million assets under management. I later started my own fund in Boston that managed $70 million. I had analysts and traders on my team, and we did a lot of research on companies. Unfortunately, this insight was stored in folders on a server, limiting its potential. I looked for a software system that could fix this problem, but there weren’t any available. So, I decided to design and build my own solution. The only problem was, I didn’t have a computer science degree. To solve this challenge, I hired developers in India. Keep in mind that this was 20 years ago and outsourcing was a newer practice. I had no idea that cultural and communication differences could make it difficult to meet milestones.
Eventually, I hired a team of developers in the States that was able to create a solution that reflected the actual workflow investors use. While the dashboard they saw still had the ticker symbols and other information that they were used to, anytime a note was added, the company symbol would become highlighted. This alerted investors to read the intelligence, helping to inform their next investment decisions. Once I began demonstrating this capability, investors started to ask for software licenses and the company took off. My entrepreneurial journeys did too.
Since stepping away from hedge funds, I’ve run five businesses, two of which have had exits. I fell in love with the creative process and with bringing ideas to life. I’ve realized that you don’t have to have the talent necessary to actually build something. But you do have to identify that there’s a real need in the market for it.
Why are you passionate about helping entrepreneurs?
[DD] I learned a lot by making mistakes. The benefit of being an EIR is that I can help other founders identify when these might occur, before they impact their businesses negatively.
As a former investor, I’m also able to look at startups from a funding point of view. One of the biggest mistakes I see is that every entrepreneur has a vision of raising a ton of money. But you can’t plan a business on this fallacy. Rochester has a lot of challenges when it comes to high-tech investments. It doesn’t have a long history in this area. And, while strong talent is fostered here, many graduate and go elsewhere to develop and commercialize their ideas, making it harder for this region to get attention.
Understanding the investment odds is a good starting point. I gave a talk several years ago to an entrepreneurial group about raising capital. To prepare, I did some research and found that only a quarter of a percent of the companies that are evaluated receive venture investments from VCs. It is possible to raise funds, but it’s more likely that they’ll come from angel investors who have expertise in the area you’re working in.
I know what types of things investors want, and why they pass on an investment. I’ve also witnessed what Jeffrey Bussgang (of Flybridge Capital Partners) describes as “rock fetch.” VCs are great in getting founders to educate them and then saying “maybe” to keep them coming back. You can avoid this by telling them upfront: “I’m not looking for money. I’m building a relationship. What do I need to do to get you to invest in my company? And, if I do this, will you give me money?” If they say yes, then deliver and keep them accountable to their word.
When you’re not working, what do you like to do?
[DD] I do like my sports! As a native Bostonian, I admit that I love the Patriots and the Red Sox. I also graduated from Notre Dame, so I’m a big football fan. My wife is from Brighton, which is why we moved back here to be close to family. Right now, we’re enjoying participating in our three kids’ activities and their sports. In the summertime, we all become Mainers — we have a place on Frye Island on Sebago Lake. It’s 300-feet deep and the clearest water you’ve seen. I’d highly recommend a trip there!