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How Many Warm Micro Vc Introductions Does it Take to Get You to Series A?



Warm Micro Vc

Yesterday at the #PreMoney conference the most frequently mentioned strategy for deal flow among venture capitalists was the “warm introduction” from an entrepreneur or an earlier stage investor.

Since the easiest filter was someone’s capability to both judge you and your idea, most investors were looking for a “previously vetted” opportunity. That did not mean an automatic investment, just a guaranteed meeting with the investor.

I had a chance to ask Micro VC investors where they felt they could add the most value above and beyond the money. Most were of the opinion that fund raising, connections to potential hires and introductions to new customers were the areas that most entrepreneurs asked for help. There were other areas that entrepreneurs asked for help, but the top 3 tended to be the same.

A typical Micro VC fund investor has more likely been an entrepreneur before or has been an investor at a larger fund, so most of them had raised money before from VC’s or LP’s. They should have a decent network of other later stage investors and some of them have angel investor connection as well, so if you are earlier stage, then they could refer you to them instead.

According to CBInsights’s Anand, there are 1400 Venture firms in the world and 1/3rd of them in the bay area, so between 400 and 500. Each VC firm has about an average of 5 people in their team, of who, 3 would be partners. So there are between 1200 and 1500 partner-level investors.

Most of the Micro VC investors I know have good relationships with at least 20-30 investors, with who they have likely done deals with or referred companies to. If they have only met another VC firm partner at conferences or events, or over coffee, it is very unlikely they will be able to give you a “warm” introduction.

When you get your pre-seed or seed round underway with a Micro VC fund or angel group, one of the key questions that will come up is who will be the investors at the next stage of the company. If that does not come up, then you should bring that up as a question. If the VC or you believe that their check or the seed round will be the last money you will ever need, then you should rethink your opportunity size.

If your investor knows 30+ partner-level series A investors, they are likely to filter the right investors by 2-3 primary criteria, and introduce you to them, given that they already know that most series A investors invest largely the same amount and look for the same range of milestones.

The primary criteria would be “domain expertise“, “value add” and “recent portfolio investments“. If a series A investor has expertise in SaaS HR, or SaaS marketing, and they can add value in the area your startup needs the most help with, for example, hiring people from other SaaS companies, so they would be a better fit.

Typically, most Micro VC funds I spoke with said they ended up making an average of 10 introductions, with the “hot” companies needing not more than 5 and the “still looking for the perfect metrics” requiring about 15 introductions.

An average of 6 out of every 10 companies that a Micro VC invested in (for the 13 people I spoke with) actually got to series A in less than 18 months without the Micro VC requiring another investment in the company was the average numbers I saw quoted as well.

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Creating Artificial Constraints as a Means to Innovation




Artificial Constraints

Many of the entrepreneurs I know have created new innovative startups thanks to real constraints they had. For example, I was hearing AirBnB’s Brian Chesky, on the Corner Office podcast and he mentioned that when he and his cofounder were trying to get some money to get started and the only way to keep afloat was to “rent” their air bed they had in their room. That, then led to Air Bed and Breakfast, which is now AirBnB.

This was a real constraint they had – no money to “eat” so they had to make it happen somehow.

I have heard of many stories of innovation where in the protagonists had real constraints of either financial, technology, supply, demand, economic, social or any number of other characteristics.

The interesting story that I have also recently heard of how Facebook has “pivoted” from being a desktop offering to getting a significant part of their revenue from mobile is how they were given the arbitrary constraint of only accessing Facebook via the mobile phone.

So there are ways that you can create “artificial” constraints to force innovation to happen.

Most larger companies and some smaller ones as well, have to constantly find ways to create artificial constraints – to find a way to innovate and be more be a pioneer.

While some constraints are good – lack of funds at the early stage for example and lack of resources, there are entrepreneurs that are stymied by these constraints and those that will find  a way to seek a path to go forward.

I think this is a great way for you to think about innovating in a new space. If you have constraints, find a way to use it to your advantage.

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The Great Mobile App Migration of March 2020




Mobile App Migration

Over the last few weeks as many in the world have been in lockdown, there has been a temporary “mobile app migration” happening. There are new apps downloaded and they replaced existing apps on the “home screen”.

While some of these apps are likely temporary use, for e.g. I have 6 “conferencing apps” – Zoom, Uber Conference, Webex, Google Hangouts, Blue Jeans and Goto Meeting. That is because of the many people I have conference calls with – each company seems to have chosen a different web conference solution.

Other apps seem like they will have staying power – Houseparty, for e.g. which has games, networking and video conferencing all built into one app to keep in touch with friends and relatives.


The apps that have moved away from my “home” screen, which I expect will come back once the crisis will be behind us include – Uber, Lyft and all the airline apps from Delta, Alaska and United.

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Perseverance with the Ability to Pivot on Data: 21 Traits We Look for in Entrepreneurs




Perseverance with the Ability to Pivot

There are 5 key inflection points I have noticed which makes founders question their startup, to either make a call to continue working on their startup, pivot to a new problem or quit their startup altogether.

It is at these points that you really get to know the startup founder and their hunger and drive to be successful. I don’t think I can characterize those that choose to quit as “losers” or “quitters” because of many extraneous circumstances, but there is a lot of value that most investors see in entrepreneurs who face an uphill part of their journey to come out on the other side more confident and stronger.

These five inflection points are:

  1. When you have to get the first customers to use and pay for the product you have built after you have “shipped” an alpha / beta / first version. Entrepreneurs quit because they have not found the product-market-fit – because the customer don’t care about the product, there is no market need, or the product is really poorly built, or a host of other reasons.
  2. When you have to start to raise the first external round of financing from people you are not familiar with at all. Entrepreneurs quit because while it is hard to get customers and hire people, it is much more harder to get a smaller set of investors to part with their money, if you do not have “traction”, or “the right management team” or a “killer product”.
  3. When you have to push to break even (financially) and sustain the company to path of being self sufficient. Entrepreneurs quit at this stage because they have now the ability to do multiple things at the same time – grow revenues and manage costs, and many of them like to do one but realize it is hard to do that without affecting the other. So, rather than feel stuck they decide to quit.
  4. When you have to scale and grow faster that the competition – which might mean to hire faster, to get more customers, to drive more sales, or to completely rethink their problem statement and devise new ways to grow faster. Entrepreneurs quit at this point because they are consumed by the magnitude of the problem. They overassess the impact the competition will have on their company, give them too much credit or focus way too much on the competitors, thereby driving their company to the ground.
  5. At any point in the journey, when the founders lose the passion, vision or the drive to succeed. Entrepreneurs quit a these points because they have challenges with their co founder, they don’t agree with the direction they have to take, or encounter the “grass is greener on the other side” syndrome.

While I have observed many entrepreneurs at these stages at  discrete points in time, I have also had the opportunity to observe some entrepreneurs in the continuum, and I am going to give you my observations on 3 of the many folks I have known, who, have quit.

Perseverance separates great entrepreneurs from good ones
Perseverance separates great entrepreneurs from good ones

One went back to college to finish his MBA after getting a running business to a point of near breakeven, another found the business much harder than he originally thought he would and got a job at a larger company and the third was just unable to have the drive to go past 11 “no’s”‘ from angel investors.

Over the last 8 years, if I look at my deeper interactions with over 90 entrepreneurs, who I would have spent at least 100+ hours each, I would say that of the 24 people that are not longer in their startup, the one thing that stands out among the ones that persevere is that it is not “passion” or “vision” at all.

It is the inherent belief that they are solving a problem that they believe is their “calling”. They also don’t believe that there is any other problem that’s worth solving as much, even though there may be easier ways to make money.

So most of my questions of entrepreneurs to test whether they will pivot or quit are around why they want to solve this problem (which I am looking to see if they know enough about in the first place) versus any other one.

The answer to that question is the best indicator I have found to be the difference between the pivots, the leavers and the rest.

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