Walter Thompson
contributor
Managing Editor Walter Thompson edits staff and guest articles for TechCrunch+ and runs TechCrunch’s guest contributor program. Previously worked on a number of startups in various roles and as City Editor for Hoodline. He is a host golden citya podcast about San Francisco.
It’s too early to determine whether SVB fall It heralds a new era for venture capital, but based on anecdotal evidence, informal discussions, and conversations with co-workers, it looks like we’re back in business as usual where it comes to raising startup money before revenue.
Not a scientific sample, but several investors indicated this week on Twitter that they’d still be interested in talking to the founders who are still in the idea stage. My hot take: With the infection contained, the venture capital community is comfortable writing startups small checks before revenue, but Series A and beyond? More menus.
As long as this downturn continues, this investor Q&A column will be TC+ monthly. If you are late The stage worker is considering leaving the business aloneAnd H-1B employee who was working until here Or just looking for tips and advice that can help you connect with early stage investors, please read on and share.
Many thanks to all the investors who took the time to answer these questions in such detail! If you are an early stage investor and want to be included in future columns, email guestcolumns@techcrunch.com With “how to promote me” in the subject line.
Those who participated:
- Brian PaquinGeneral Partner, Lightship Capital
- Masha Bowsher, Founder and General Partner, Day One Ventures
- Rebecca Leo DoyleGeneral Manager, Insight
- Clelia Warburg PetersManaging Partner, Era Ventures
- Nick AdamsManaging Partner and Co-Founder, Differential Ventures
- Lisa LambertFounder and President of National Grid Partners
- Elizabeth YenFounding Partner and General Partner, Hustle Fund
Brian Paquin, General Partner, Lightship Capital
What kind of investment opportunities are you looking for in March 2023?
Like many investors, we are optimistic about artificial intelligence. We made two AI-related investments in April and continue to look for opportunities in this area.
How would you prefer the founder to reach out to you with their initial pitch: a cold email, a warm introduction, or some other method?
We have an online portal at The lighthouse Founders can use it to apply for investment. We do this to prevent a problem with venture capital investors called “network bias”. Founders should apply on our portal and proceed Twitter.
What is one traditional fundraising tactic that founders should remove from their toolkit—something that no longer works but is still common practice?
Ask for warm introductions and try to “build rapport” with investors. Spend your time building a great business and the investment will earn. I don’t need new friends.
Tell us about your best show recently. When did you realize during your presentation that you were going to invest?
I was recently introduced to a company called MuseTax. Excellent founders, subject matter experts, the real deal. They made me want to invest in the first 10 minutes. They are diligent now.
Can you share one piece of advice that can help a first-time founder stand out?
Don’t focus on investing; Focus on design. Don’t let your engineers make you an ugly product with password reset functionality but limited user value.
Don’t let the engineers tell you it’s not ready; that it. Push it and learn.
Design it well and users or investors will follow. Design the first copy well and you’ll end up with a lot of engineering bills and no progress.
What are you reading/watching/listening now?
I keep re-watching the first season of “Billions”. You know, before it got weird 🙂. a great offer.
Masha Boucher, Founder and General Partner, Day One Ventures
What kind of investment opportunities are you looking for in March 2023?
During a healthy fundraising environment, founders who give it their all often tend to be good storytellers and can impress investors with their personal charisma. They are good talkers by nature and express their vision.
There is another type of founder with a different background. They are often down-oriented, pessimistic and resource-oriented. I call them “survivors”. Survivors are often immigrant founders, people of color, women, or others from underrepresented backgrounds.
I think survivors are the types of founders who have to bounce back during an economic downturn. They’ve been driven to be terrible and to survive their whole lives; They are specially equipped to handle what the current times demand of them. They are good at making something out of nothing and are very cost effective.
I am looking for monetization paths, business models, and avenues to profitability. Investors pay more attention to numbers, business models, and how well the founders manage their finances. Expect more business model-challenging questions.
I’m looking at how much revenue comes from product quality versus marketing. Founders who generate exposure based on product quality show they can make money with a little marketing spend.
We like companies with high EBITDA. We love companies like Quinn, whose revenue has grown into the millions within just a year of launching through no-cost viral marketing on TikTok.
How would you prefer the founder to reach out to you with their initial pitch: a cold email, a warm introduction, or some other method?
Cold email works great, but surprisingly few people can get it right. In a cold email, every sentence has to convince me to take a meeting. With every word, every sentence, you need to create the desire for the investor to meet you in person. You need to give a clear reason why you should meet now, and not next month.
