BUSINESS FORUM: How feasible is it to raise funds in the US from my current location?

Q: It is very difficult to get venture funding in my country because there are only two VC firms and both are small and extremely risk averse. Is it possible to raise venture capital in the United States to start a photonics company here?

A: I don't want to discourage you from trying because an entrepreneur is expected to be persistent and never accepts no for an answer. I believe it would be very difficult, if not impossible, but let us also discuss what you might do to gain traction with potential investors on US soil.

Advice that is frequently given to investors is to "invest within your area code." The point is communicating is difficult enough even with face-to-face discussion and site visits, let alone having to communicate by phone, e-mail, or even video conferencing. Most VC firms hardly ever invest in a company that they cannot easily visit. To avoid this problem, they would even set up a branch office perhaps in Shanghai, Beijing, or London. The hurdle in your case is it will take close to 30 hours to get to your place from the West Coast and there are not many investment opportunities in your country to justify setting up a branch office.

You might be able to entice some investors here if you can prove your team is good at product development, and that your long-term goal is to have an R&D facility in your country and business development headquarters in the US close to your main market and investors . To achieve that, you need to develop the product and get a few orders so you can validate the market potential. Figure out a way to get seed funding from your local VCs, angel investors, and government agencies to get the ball rolling.

Q: In one of your speeches, you said generalists cannot compete and you also said to become broadly knowledgeable. Isn't this a contradiction?

A: To avoid this confusion, I should have said to become a specialist and also take initiative to become broadly knowledgeable. We are always competing with specialists anywhere we go, whether for a job or for business development. And the specialists are likely to be the winners given that they have the expertise. Being broadly knowledgeable enables you to draw from what you know to make sound decisions, recognize opportunities, and sell your position effectively.

It benefited me greatly to have started reading the Wall Street Journal, Business Week, Fortune, and Forbes regularly when I was a graduate student. I have hardly ever missed an issue since then. The eclectic information I picked up over the years enabled me to draw analogies that helped in making business decisions.

Analogy is useful because business is about dealing with people who have similar motivations. For example, you may recall holographic interferometry was being promoted in the '70s for testing the integrity of aircraft tires. Even minute defects deep inside the tire become visible by using lasers to make two sequential holograms of a tire with a small perturbation between shots. Tire companies rejected this technique, claiming it was too cumbersome, until FAA mandated that every rethread tire must be tested after a DC 10 crash-landed in Los Angeles International Airport with multiple-tire blowout. The speculation in the laser community is that tire companies did not want to have a record to be used in court as evidence that they knowingly sold defective parts. With this episode in mind, I have avoided investing in any quality-control company, even in software to monitor the effectiveness of an information system, to give one example. My reasoning is it will be a hard sell because someone will always resist the product in order to avoid being identified as a culprit if any deficiency is found. Always understand how purchasing decisions are made. In this example, the IT manager responsible for operating the system is also a decision maker who could buy your product.

Click to EnlargeMILTON CHANG is founder and managing director of Incubic Management LLC. He is also director of Precision Photonics and mBio. Chang is a Fellow of IEEE, OSA, and LIA. He has received Distinguished Alumni awards from the University of Illinois and Caltech, is a trustee of Caltech, and is member of the Committee of 100. Contact Chang at with questions, and visit for other articles he has written regarding entrepreneurship.



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