Category Archives: venture

Mar 25

My Next Venture

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Recently I decided on my next venture.  The process leading up to this decision was not short and it’s fair to say that my next venture, in many ways, chose me.

After an unplugged week in Mexico, in the summer I kicked up my self-exploration into full gear…reflecting and spending a lot of time learning more about myself, my goals, my interests and passions, all in efforts to figure out how and where I wanted to spend my time.

I’m a very analytical person and tend to make decisions more so from my head than from my heart.  I have been working on keeping a balance and some of my most recent decisions I have been pleased with the way I have been able to listen to my heart.

First, I decided to leave my job at RPM Ventures.  I have several reasons for leaving, but the story goes…I joined RPM Ventures to learn how to be a better entrepreneur.  I knew that working in VC would give me opportunities to see many companies, industries; meet many entrepreneurs; see what works/doesn’t work; and learn what it takes to be a VC backable entrepreneur building a VC backable company.  Mission accomplished.  Before VC I was on the entrepreneur side of the table and I knew I’d always go back and that VC was a great learning stint.  It was only a matter of time before I left the “dark side” (which isn’t so dark) to tackle big problems to make a positive impact in the world.

After deciding to leave RPM Ventures, then came deciding what I wanted to do instead.  What I learned:  there are so many things I want to do.  I threw a ton of ideas on the table – either ventures to start, companies to join and build, places to travel, sketches to write, people to meet, and beyond.  I asked myself a lot of “thought questions”, spent more time journaling, reflecting, and taking inventory of my interests, passions, and skills.

I realized that I love healthy living.  That may be an understatement.  I am fairly obsessed with healthy living.  Daily I wake up before dawn to go to the gym (either teaching a spin class, going to crossfit, hot yoga, a run, etc), I am uber deliberate about what I eat and how I treat my body, and I could read about health, nutrition, and clean eating recipes endlessly (and could also have such conversations for extended periods of time).  And I am very mission-driven…I want to make a positive impact in the world.  Combine the two and it seemed to make sense that I pursue a venture related to health-food-life-tech.  Figuring that out led me to immerse myself…I started tracking companies and researching trends, and formed a list of over 200 companies in the health-food-life-tech arena (still broad, but more focused than everything).  I spent time talking to founders, potential partners and stakeholders, investors, trying to learn more about opportunities and white space where I could solve some problems.  I was very focused.

Then I received some of the best advice I received along this journey, from one of my mentors.  When I told her about my search, she advised, Stop planning so much.  Be opportunistic.  You’re so focused and planning so deliberately that you may miss opportunities that come to you that aren’t within your lens.

She was right.

I took a step back.  I asked myself some high level questions like “What do I really want with my next opportunity?”

The opportunities I had explored didn’t have that spark.  I didn’t want to be “silo-ed” in a specific function in a company with hundreds of people already.  I did want to… solve a really big problem and a real problem.  I did want to find a mentor and work with amazing and talented people.  I did want to have the opportunity to work in a variety of projects/domains.

When I took that step back, I realized that the opportunity I had been looking for had been in front of me the entire time.  A company RPM Ventures invested in, Social Finance (SoFi), caught my eye the moment I learned about it in 2011.  SoFi connects students and alumni through a dedicated lending pool.  Alumni earn a double bottom line return, students receive a lower loan rate than their private or federal options, and both sides benefit from the connections formed.  I had the opportunity to work with SoFi as part of RPM’s portfolio.  In doing so, I got to know the team, the business, and the potential.

  • SoFi is solving a HUGE problem: student debt. $1 Trillion.  Enough said.
  • I have a mentor.  Many.  And am blessed to work with amazing people.
  • There is room to grow.  With about 60 people and a growing business, there’s always something to do!!
I am glad I went through a “process”…learning about myself, exploring several opportunities, crossing things off my list and adding things on.  Even though ultimately the opportunity I am pursuing was there before all the others, I believe the process I ran was helpful for me to discover what truly was right.

And there you have it…my next venture!  I couldn’t be more excited!

Venture on,

mel, the Venture Gal

 

 

 

 

 

 

Sep 12

The Investor I Never Saw

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The title of this post is misleading because if you raise money, from anybody, expect to meet/speak with them.

This may seem obvious, but it’s not always well understood.  Whether you raise money from your parents or a venture capital firm you can expect that your investor will want regular updates.  With your family investors, you may have conversations around the dinner table about the company, or you may get a call every day, asking about how the business is progressing.

When an entrepreneur takes venture investment, there will be board meetings.  Even successful entrepreneurs that raise money regularly meet with their investors, so there is no reason why a first time CEO would not have regular meetings.  And believe it or not, meeting with your investors can actually be quite valuable (depending on who your investors are).  In particular,

  1. Investors are your partners.  When you’re raising additional capital, need an introduction, or are facing challenges you’d like advice about, investors are here to help.
  2. You have a responsibility to your investors.  Keeping your investors updated and in the know about what is going on at the company is a good way to eliminate surprises down the road.

If you don’t like an investor enough to have a conversation/meeting with her/him, then it’s probably not a good investor/investee relationship to begin with.  Think of it this way, would you date someone you never wanted to see?  Just saying…

As a VC analyst I am fortunate to get to meet/speak with the companies RPM has invested in and get a regular update about how things are going with the company. On the flip side, VCs also report back to their investors, so part of my job involves putting together written reports to our investors (aka LPs/Limited Partners) and preparing for our meetings.

Bottom line:  No one is too good to receive advice or help from their investors.

Venture on,

MEL aka Venture Gal

Sep 08

What Does a VC Analyst Do? Analyze, Duh!

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By definition an Analyst is a “person who analyzes.”  (Why is it that the Merriam-Webster dictionary can get away with defining words by using some form of the word in the definition when teachers did not allow for that when I was in school?!)  So by definition, a venture capital analyst analyzes.  Oh but I do so much more.

Awhile ago there was a blog post from Venture Dig about “what do venture capital analysts do.”   That post was written over two years ago, and though I’m sure there are some similarities, what I do as a venture capital analyst isn’t necessarily the same.

I work on several different projects and no two days are really alike for me.  I categorize what I do into four simple buckets: Portfolio Companies, Investment Opportunities, LPs, Admin/Misc.  Here’s a sampling of what I work on within these categories:

  • Portfolio
    • Helping our existing portfolio companies with various projects
    • Exit analysis for our companies
  • Investment Opportunities
    • Meeting with entrepreneurs, companies
    • Doing diligence on companies we’re interested in investing in
  • LPs
    • Putting together our quarterly report
    • Tracking investments
  • Administrative/Miscellaneous
    • Organizing and/or participating in community related events
    • Managing our website revamp
    • Running errands

There you have it.  That’s a sampling of what I, a venture capital analyst, does.*  Any given day is different though, so stay tuned to learn more about what I’m learning.

Venture on,

MEL aka Venture Gal

*Notes:  Keep in mind, I work for an early stage venture capital fund in Michigan.  VC analysts in other parts of the world or other types of funds may have different experiences than I.  I will write about my experiences.  Also worth noting, not only am I a VC analyst, but I’m an entrepreneur as well.

 

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Sep 07

New Year, New Venture Gal

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This week begins my second year as an Analyst at RPM Ventures (I started working at RPM full time the day after Labor Day in 2010).  A year went by so fast, and as I look back and reflect on that year I realize a few things:

  1. I learned a lot!  Essentially I have been a sponge, soaking up as much information, knowledge, advice, perspective, as possible.
  2. This blog has not been a useful tool in storing and sharing what I am learning.  More on this further along in this post.
  3. Managing time in a job is not like managing time as a student.  

To elaborate on each of those points a bit more,

1.  I did learn a lot.  I look back and a year ago I would take a different approach to how I would evaluate companies, starting and building companies, raising capital, and other topics.  What I learned in school isn’t necessarily how it works in the real world, and I appreciate knowing a bit more about how the real world works.  I learned from projects, meetings, my day to day activities, as well as learned from feedback from the RPM team and others.  I could make a laundry list of all the different things I learned, but I realize that may be putting the cart before the horse, which brings me to point #2.

2.  This blog has not been what I set out for it to be, for me or my readers.  Yes, it’s been witty and featured some interesting and entertaining content from time to time, but it isn’t something that I feel I will go back to and reference when I want to remember what I learned about a particular subject.  Based on my own reflections and feedback from others, I have decided to take a new direction with Venture Gal, a “pivot” if you want to put some “Lean Startup jargon” to it.

One of the primary reactions I get when I tell people that I am an Analyst for a venture capital firm is “Cool…so what do you do?”
Let me ask you….do you know what an analyst for a venture capital firm does?
…
*crickets*
…
I sense a problem.  Who are these creatures who work with the well known venture capitalists?  What do we do?  I can’t speak for all, but I can give a glimpse into the life of a VC analyst from my perspective.
This also means more posts, less polished.  Rather than spend days marinating on a post topic and pulling it together very prime and polished, I may write 3 sentences at the end of a day, which may not bring any particular insights, but share a piece of my day.
3.  Time management skills are essential to productivity.  I’ve learned that managing my time as a student was much different than it is now.  When I was a student I practically owned my schedule.  Other than classes, which were set periods of time, I could study when I so desired, sleep, eat, workout, and control when I did those things.  Now, I am dependent on other peoples’ schedules and I must still get all of my work done.  I have experimented with different habits, methods, and tools for productivity, so here’s for a more productive 2nd year at RPM Ventures!
Venture on,
MEL aka Venture Gal
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May 16

Investors like Proven Jockeys & Top-Notch Thoroughbreds

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In spirit of my adventure to the Kentucky Derby last weekend, I’m going to write about what investors look for using an analogy I commonly bring up when an entrepreneur asks me what venture capitalists look for when making investment decisions – the horse racing analogy.

There are three key things investors look at – the product, the team, and the market.  In other words – the horse, the jockey, and the race.

To elaborate:

  • If a horse is lame, obviously there isn’t a good chance of winning the race.  If a product is lame, no one will buy it.  It’s as simple as that.  A stellar horse/product is eye-catching.
  • A horse with great bloodlines is worth a lot more.  Would you like to race Secretariat’s offspring?  A product with strong IP compared to one without is a similar case.
  • With the right jockey, a less impressive horse can race really well.  The team is so important.  What it comes down to is that people really matter…a lot!  A great product and market are nice, but without a team executing toward a common vision, it’s just not as compelling.
  • A jockey with a proven record of success gets more bets than the new gal or guy.  A team with a track record of success starting and exiting companies is a sure way to get an investor closer to putting his/her money down.
  • A jockey and a horse need to be the right fit.  Both could be top athletes, but they may not work well together.  For anyone who has been on a horse, you know when it just isn’t right.  In a startup, a great team and a great product can work out really well.  But if you have a talented team in the software industry and stick them with an awesome solar technology, it may not be the best fit.
  • You want to be in a big race (market).  Racing in the Kentucky Derby is a lot more interesting than some small local race.  Sometimes you need to race in the small races to train for the Triple Crown, but if there’s no potential for the Triple Crown that’s not exciting.
  • All three – the product, the team, and the market – are very important considerations for VCs when evaluating investment opportunities.  Sometimes having 2 out of the 3 (e.g. a great product and great market) is not a deal breaker – a team can be built – especially when the company is early stage.  Of course, the more complete the package, the more likely a VC is going to be interested!

Think about it…how would you place bets on a horse/jockey in a race?  What do you look for?  Previous success, pretty horse, cool name…these can all be compared to what a VC looks for in an investment opportunity – previous success, good looking product, catchy name…

When you’re evaluating opportunities to invest, or building your company and fundraising, think about whether or not you would bet on your horse and jockey in the race you’re running.  If not, why not?  What are you missing?  If you can bet on yourself it’s a lot easier to convince a VC to bet on you.

MEL

Aka Venture Gal

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May 03

The Ten Commandments for Startup CEOs

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Want to keep your role as CEO in a venture-backed company?  For a start, follow these ten commandments:

  1. Thou shall openly communicate with the company team and investors.
  2. Thou shall keep one’s clothes on at a board meetings and any company function for that matter.
  3. Thou shall not surprise board members at meetings.
  4. Thou shall not spend investment funds on fancy European cars or espresso makers.
  5. Thou shall not aspire to run the company as a lifestyle business.
  6. Thou shall keep the cap table clean.
  7. Thou shall not sleep with interns.
  8. Thou shall return calls of and take meetings with potential partners, acquirers, investors, and rock star potential hires.
  9. Though shall execute.
  10. Thou shall track metrics and share with analysts and associates at venture capital firms =)

Follow these commandments and at least be doing (or not doing) things that can make or break a startup CEO!

Any to add to the list?

MEL aka Venture Gal

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Feb 21

Show Me the Data!

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Over the past 6 months working at a venture capital firm, I have developed a pet peeve – not having readily access to data for our portfolio companies.  This is especially coming through the woodwork as we put together our end of year financials, report, valuations, and a host of other things that we need portfolio company data for.

So note to others and note to myself – include relevant information (financial information, headcount, burn rate, cash on hand, and other key metrics specific to your company) in board decks and updates to your investors and your team.  It will be a help to the VC (well the VC Analyst at least =) and it will free up some of their time tracking down this information so that they can help you!

MEL aka VentureGal

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Feb 10

What I learned when I was sick

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I make an effort to never say “I don’t have time” because I do have time for whatever I make time for.  Being sick is one thing I do NOT like to make time for and for the past week I have been recovering from the flu and an upper respiratory infection.

For the first few days I was in my bed all day, with occasional trips downstairs to make tea, eat soup, refill my humidifier, or replenish my cups of juice and water.  Laying in bed resting is not something I do well.  By day three I was at least feeling a bit better, enough to add a work station to my rest station.  I had my laptop on the table next to my bed to respond to some email here and there.  I also watched some videos online and a documentary that were enlightening, and I took notes to share:

Advice for starting a company

  1. Find the right cofounder.  Someone with intelligence, energy, and integrity.
  2. Tackle a big market problem.
  3. Create a minimum viable product and then iterate the product to fit the market needs.
  4. Raise money from people you trust.

Founder facts & tips

  • Someone who works before money is available.
  • Will do any job. No VP titles.
  • Won’t give up.
  • Doesn’t need to be managed.
  • Intelligence, drive, integrity.
  • Vests!
  • Someone you already know
  • Split equity 50/50
  • 2 founders with complementary skill sets (e.g. one product/tech, one marketing)
  • Domain expertise is overrated!

Market tips

  • Pick the biggest possible addressable market
  • Learn everything about it
  • No niches

Need passionate users. Some people will love your product and some will hate.

Investors

  • Trust people they’ve backed in the past (confirmation bias)
  • Know within 10 minutes (usually) if they are going to invest.  Look for traction (social proof from customers), team, social proof (other investors in), and product (prototype, mockups).

Beware of:

  • Teams with all executives, no founders.
  • Teams with all thinkers, no doers.
  • No focus or a niche idea.
  • No demonstrable product.
  • Heavy focus on legal or accounting.

“Perfection is achieved not when there is nothing more to add, but rather when there is nothing more to take away.” – Antoine De Saint-exupery

Facts about gaming:

  • 3 bilion hours per week are spent playing online games
  • To solve problems like obesity and climate change that needs to increase to 21 billion hours
  • An epic win is an extraordinary outcome
  • In the game world we are the best versions or ourselves
  • By age 21, average gamer spends 10,000 hours playing online games.  By age 21, with perfect attendance, a person spends 10,080 hours in school.
  • There are over 500 million global gamers (spend more than one hour per day gaming)
  • Gamers are super empowered hopeful individuals.  They think they are capable of changing virtual worlds.  They have urgent optimism (desire to act immediately), social fabric (like people better after playing game with them), blissful productivity (happier working hard at the game), epic meaning (love to be attached to missions)
  • World of Warcraft is the second biggest wiki

Facts about credit card debt…

  • The average U.S. household carriers $9,205 in credit card debt and spends more than $1,300 per year in interest payments
  • Between ’94 and ’04 10 million Americans declared bankruptcy.  In ’06 more will declare bankruptcy than graduate from college or get cancer.

 

Resources:

Before you raise money on Venture Hacks

Jane McGonigal’s TED Talk “Gaming for Good”

“Maxed Out” Documentary

 

 

 

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Jan 25

9 Mistakes First Time Entrepreneurs Often Make (from Michael Gaiss, Senior VP at Highland Capital Partners)

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This past Sunday I had the honor of judging the University of Michigan Startup Weekend.  Before the ten teams presented their companies, Ben Kazez (Founder of Mobiata) and Michael Gaiss (Senior VP at Highland Capital Partners) enlightened the crowd with their entrepreneurial wisdom.

Michael Gaiss outlined 9 mistakes he sees entrepreneurs make with their first startup, followed by some of his and my suggestions to avoid these mistakes:

1. Don’t research and understand the competition

Research and understand the competition.  If your company has “no competitors” that often signals that the opportunity is not interesting enough to pursue.

2. Haven’t talked to customers

Talk to customers.  Who better to get feedback from than the folks that pay for your product/service?!  Understand their pain and what they want to see in a solution.  And most importantly, LISTEN to their feedback and USE when it makes sense.  Don’t talk to customers for the sake of talking to customers.  Talk to them to learn and react to build a stronger value proposition and company.

3. No repeatable customer acquisition strategy

Acquiring your first 50 customers may differ from the next 100, and so forth.  Develop a strategy to acquire your first customers, but also to continue building customers as the company scales. (And don’t forget about retention – customer service is very important!)

4. Don’t tell a good story

Tell a story when you talk about your company.  Whether you are pitching to investors, customers, recruiting, or even just telling your friend about it…a story is always more interesting and engaging.

5. Know nothing about investors they are pitching

Do your due diligence on the investors you are pitching!  Know their backgrounds, what they have invested in, and their expertise.  Look for an investor that is relevant to your company and will be a value add partner.

6. Make stuff up instead of saying “I don’t know”

Don’t do this.  Period.

7. Seek only confirming, not disconfirming evidence

If you are going to get feedback or do research, and you are only looking to confirm what you already believe and are not open to opposing views…that’s a problem.  Challenge your beliefs, and if you are to err on the side of seeking confirming or disconfirming evidence….choose disconfirming.  You’ll learn a lot more that way.

8. Pick advisors that are easily accessible, not relevant

If you have a big name on your advisory board that may look fancy and catch eyes, but if you speak to that advisor once a blue moon then what good is that really doing you?  There may be a role for big name advisors, but in general, when you are starting your first company you’ll want accessible advisors that add value to your company’s development.  A quality advisory team also highlights a team’s ability to attract talent.

9. Treat fundraising like it’s an end, not a means

The purpose of raising money is to support entrepreneurs in building a company.  Money is the means to building a successful, sustainable company, and that is where the focus should be.  Think about it this way, once you raise money, you aren’t done. Now it’s time to use that money to focus on nailing your value proposition and building a successful and sustainable company.

You have been forewarned.

Have you made mistakes or observed mistakes to add to this list?

MEL aka Venture Gal

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Nov 11

The Art of Pitching to a Venture Capitalist

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“Pitching to a VC is an art all in itself.” I am learning this more and more, as I listen to several pitches a week from entrepreneurs seeking to raise venture capital.

After hearing pitches and the investors’ feedback, I have a few related tidbits to share. There will be plenty more to add to this list, as I shortened it for brevity sake and will continue to add more from what I learn.

1. VCs know when an entrepreneur hasn’t pitched to a VC before. This goes back to “pitching to a VC being an art all in itself.” It’s an art that is developed with practice.
2. “A presentation to a VC is an opportunity to engage someone in a discussion” and if a VC starts a discussion with you, pulling away from the planned presentation, well done!
3. “VCs are ADD” so keep things clear and simple!
4. Tell a story. VCs listen to stories. Include information about the size of the market, why you are there, and why you are the person to lead the company.
5. When you can justify information yourself, it is much more powerful. In particular, use back of the envelope calculations to back up market size claims.

There is plenty more to come! I’d like to thank @greatlakesvc for shedding light on the art of pitching to a VC (phrases in “quotations” are from him).

MEL aka VentureGal