Call with Founders Today and Why I Love Working In VC
Today I had the privilege of joining on a follow up call with one of my colleagues. We met with an ecommerce startup looking to add value to SMB in the restaurant industry. The order of this post is as follows.
1. Timeline and process involved
2. Topics/Questions of discussion
3. Appreciating Founders and having humility as a VC
Step 1: The process started with outreach to founders. We often utilize CrunchBase, Startup School, Indie Hackers and Twitter to locate relevant startups, that fit the funds investment thesis. In this case my colleague brought in the lead. They utilized LinkedIn to reach out to the founders and set up an initial feeler meeting. By the end of the meeting you will need to ask for the pitch deck. It is also important to find out how much the are raising for the round and how soon the they are looking to close the round.
Step 2: As a fellow, once a pitch deck comes into the fund’s system, our superiors spend some time quickly screening the deck to make sure it is a viable opportunity that matches with the funds objectives. The deck is passed onto us, we dig through it and prepare additional follow up questions for the founders. At this stage some research is conducted.
· I l like to spend some time reviewing the team’s background and domain experience.
· Perform some quick research to confirm the TAM, TOM, CAGR of the market and industry for the product/service. I like to be able to visualize the identifiable problem easily. In venture the goal is 100M ARR, we are in business of identifying unicorns!
· Spend some time looking up competitors. If there is any part of the deck you had trouble understanding, this should be included in the list of follow up questions.
Bonus tip: I’ve found YouTube content to be very valuable. A significant number of startups have online content. Founders notice when you’ve taken the time to perform this kind of due diligence. These videos are often short and concise, which adds a lot of clarity. Previous pitches to accelerators make for great background content.
Step 3
The follow up call, on this call we are primarily looking to fill information gaps. It is generally more in-depth than the 1st call, granular in its orientation. Here are some examples of questions asked today?
1. Has your product, tech encountered any problems, if so, what steps were taken to resolve the issue?
2. Do you have any customer feedback? How do you manage customer success?
3. Is your marketing strategy scalable? What’s the CAC? Customer retention rate?
4. What value add differentiates you from the competition?
5. Startup’s 5-year outlook
I personally love the 5-year outlook question, it gives founders the opportunity to fully articulate their long-term vision for the company. In some instances, it may allow VC’s to see future value adds that have yet to be recognized. This question allows you to enter their mind in a unique way.
Lastly, hearing the grand vision of founders. Brings me a sense of humility as a VC. As we have an obligation to play our small part in bringing the best ideas to light and eventually to scale. This represents our tiny role in advancing humanity and improving life here on earth.
Step 4
Now we will take all the information gathered to write a memo. It will be presented to our boss and the rest of the fellows. If we get the ok, working on syndicating the round begins.
If we get the ok, I will discuss the syndication process in-depth.
-Kirk
