Q. How has the venture capitalism market changed since the late 1990s?
A. The business is still the same: We're trying to find companies that have great innovation and need capital to bring them to market. The only real difference is the level of optimism ¯ There are more realistic expectations and more skepticism today, which is healthy.

Q. Given the black eye that the telecom industry got during that time period, are optics indelibly linked with those failures?
A. In the late '90s, people associated optics with telecommunications, and assumed that the only applications for new technologies were telecommunications € whereas today there are lots of new emerging applications for optical innovation. For example, there's the whole TV market ¯ the solid-state lighting industry, consumer applications¯. We're in this big transition now from incandescent lighting to solid-state lighting € there's hundreds of opportunities within that technological migration.

Q. What do you look at in determining if a business will be successful?
A. Two things are most important, from our perspective. One is TAM € total addressable market € and the other is relative value proposition, meaning what is the economic or functional benefit of the product, relative to the leading competitors. ¯If you don't have a relative value proposition € it's cheaper, takes up less space, consumes less power, or does something that enables performance that it couldn't otherwise achieve € it doesn't matter how cool it is.

Q. What mistakes do people make when approaching investors?
A. It's amazing to me how frequently we see entrepreneurs who have not researched either the TAM or relative value proposition¯. Some of the first questions we're going to ask are "How many units of this type of product sell today?" "Why is (the market for this product) going to grow?" ¯ and "Why can you provide a better solution?"

Q. What do you want to see in a business plan?
A. They need to have a deep understanding of the market: How big it is, how fast it is growing, what are the dynamics that are creating opportunity for a start up. ¯ They need to understand intimately their competitive advantage € why are you better, why would someone choose your product. And they need to understand their financial requirements € how much cash do they need to get to a given milestone.

If there's some new innovation that they're bringing to market and haven't proven that it works, we want to understand why they think it will work.

Q. How do angels differ from venture capitalists?
A. We're all out there with capital, and looking to earn a return on that capital. Angel investors generally have a smaller amount of capital, but perhaps more time to work with an entrepreneur¯ at an early stage. We invest from $2 million to $20 million in a company, whereas an angel might come in with a couple hundred thousand dollars, generally less than $1 million.

Q. Why is entrepreneurship important?
A. Most economists will agree that technology is the primary driver of economic growth ¯ Large companies are a lot slower at bringing new technologies to market, and that leaves you with the entrepreneurial process as the most efficient way of bringing new technology to market. But they need capital to do that € and the venture capital process has proven itself to be the most efficient way to provide capital to entrepreneurs, versus government funding or corporate investing.

Q. What type of return are you looking for?
A. For a late-stage investment that has most of the risks off the table, a 30 percent to 40 percent IRR (internal rate of return) would be a common target. For an early-stage company, you know that some of them aren't going to make it ¯ (so) you have to shoot for over 100 percent IRR.

Q. How long are you willing to wait to see a profit?
A. In terms of exit and getting our money back, a typical investment horizon is around five years, maybe less. It's actually extremely expensive to go public these days ¯ our preference is to have an acquisition. It's faster, cleaner, and we don't have to sell our securities on the open market.

Q. What is the most important thing you look at when determining if a company would be a good investment? Management, management, management?
A. "Market" above management. You can always change management. It's a lot harder to change the market.