pre-seed vc

Heroic Sideqik

Back in 2012, I was a sole GP investing from a windowless office in a shared workspace south of Market. With the backing of several remarkable and patient LPs, I had raised $7M of capital and invested in only 25 companies. I was learning a lot in a very hands-on manner.

The portfolio had its moments of high drama, as portfolios usually do. During this time, Sideqik (Bee I) was on the violent swing of the entrepreneurial roller coaster, with a big personnel change at the top. Co-Founders Jeremy Haile and Tree McGlown and I jumped on a call ... It could have been our last. We were brutally honest about the challenges ahead and the near-certain death as a result of an utter lack of capital and a product that just wasn’t working. On that call, I promised to work with them weekly to help right the ship.  Sometimes daily, on those calls and in those meetings, we would discuss the upcoming opportunities, what was being learned every week, what was being accomplished, and what to do next. After every session, Jeremy and Tree would return to the grind and execute with what limited resources they had.

Through those meetings two things happened. One was that a spark began to be lit in these Founders that gave me measured confidence (hope, perhaps?) that these two were the right people to raise this phoenix from its ashes. The second was the conviction that Bee Partners would dedicate and devote time to any founding team that was truly struggling yet definitely had the functionality, the resource magnetism, the empathy, and the passion to execute for brilliance. And, we had LPs who had co-invested as well—we weren’t about to cut bait as would so many other “rational” VCs. We saw that this was not a situation where they weren’t cut out to be Founders, not at all. They just had their backs against the wall and had to make remarkably difficult choices in that phase of their entrepreneurial journey.

Just like a society should be judged by how it supports its most vulnerable members, so should investors be judged by how we support our portfolio companies in their darkest hours.  

This was by no means a quick turnaround and I have long been inspired by how Jeremy and Tree navigated the very squiggly line of entrepreneurship. Every single time they generated some revenue, they would plow it back into the company, and Sideqik became a steady drumbeat of more customers, more employees, more resources. There were always trade-offs—should they hire for marketing or engineering—and real struggles to determine the best uses of capital. But they were making progress, picking up customers like Coca-Cola, Universal Music, and Procter & Gamble.

And then, in 2017/2018, growth rocketed—they had found product-market fit! Their phenomenal patience finally started to pay off and, as of this week, the company is now capitalized with a $5M Series A, led by Jackson Square Ventures.

So, congratulations to Jeremy, Tree, and the entire team at Sideqik, and to JSV for adding these resilient operators into your portfolio—Next step, $100M in revenue!

Authenticity Reigns Supreme

Today, a founder named Matt (edited for anonymity) dropped by my office to say hi.

I left our first meeting a week ago with a positive bias towards supporting his vision and potentially making an investment.  However, I also left with  skepticism that Matt was holding something back, that the story had been edited and overly polished.  The pitch, which was textbook, was far too product and progress oriented given how young the company was.  It was impersonal.

And so, in strolls Matt a week later to exchange pleasantries and share some little wins from the week.  I stopped him, “Matt, that pitch was awkward, in spite of your company’s progress.  Am I missing something?”

And so it comes out – how Matt had found a mentor to support these early days, and had been advised to stay on message with investors, keep with the story, and pre-package the opportunity to match ‘what investors want’.

Fast forward an hour later, and I’m left in awe.  Multiple team members working for nothing, no formal contracts, no promise of future equity or compensation.  All of them working on their trust in Matt and relying on his integrity to reward their early sacrifices.  Not to mention more progress (revenue) and better visibility on new opportunities beyond the initial hypotheses.

Matt’s pitch had failed to parallel his values or his character, and he instead told me what he thought I wanted to hear.  It fell flat.  Based on my own experience, investors want authenticity more than promise, and integrity more than progress. 

When practicing your pitch, make sure a little bit of You, your Self, comes out with the story.  If it doesn’t fit, change the story to match You as a person.

And if you’re getting coached by someone who has raised capital themselves, make sure their experience is recent and relevant.  If you’re raising seed round, find an entrepreneur who raised in 2011 or an angel investor with experience.  If you’re raising an A round, find a founder who’s been through it, or seek mentorship from an associate/principal at a venture firm.

At least with angels, be honest, share more than you think you should, and stay true to your Self.  You’ll raise more money faster, and the relationship with your angels will grow stronger and more valuable as a result.