CRV Invests in Sudden Coffee. Read A VC’s Process From Start-To-Finish.
Here’s the news right up front: CRV is happy to announce that we’ve led a $2.7M seed round in Sudden Coffee along with top funds like Founder Collective (great seed investors in Uber, PillPack, and others). What follows is the detailed journey of how in just one week, CRV met Sudden’s founders and invested in the company.
My last company reflected an idealism, and belief in transparency, that I hope came through in how we operated in the open source world, all the way through to Wordpress acquiring us.
When Kalle and Josh, the co-founders of Sudden Coffee, emailed me about announcing the seed round CRV were leading, along with the company’s blog post I thought sharing a start-to-finish blog post might also bring transparency to the early stage funding process.
With the blessing and permission of Josh and Kalle of Sudden Coffee, here’s the detailed timeline, along with commentary, for an “investment that got over the finish line” for CRV:
July 2016: It all began when I received an email from my brilliant fiancée with the subject line “Whoa” and a link to this New York Times article. Following that, she simply wrote “This is a cool idea if it’s actually as good as it says.”
As background, I’ve run all of my investments past my fiancée and she’s been my secret weapon in our personal portfolio (a first round investor/advisor at Blockchain, Clearbit, Instacart, Luxe, Vurb, and Webflow) and then leading investments at CRV (Amino, Sudden, and 3 stealth projects) that started when I was promoted in the spring of 2015. If my fiancée wanted to be a venture capitalist, I think she’d be incredible!
August 9th, 2016: The day after having my term sheet accepted on another financing I had been working on all summer, I initially cold-emailed Kalle Freese, the co-founder of Sudden Coffee. The closing excerpt from my email to him: “This is a long winded way of saying I’m interested in bold consumer companies and I think there’s enough cool stuff that I can see about Sudden to be curious to learn more (if you’re interested in meeting). If so, I’m based in SF and would love to buy you a coffee. :)”
August 30th, 2016: After returning from a long work trip, Kalle replied to me willing to meet up in-person. At this point I had already done research on him and on Sudden Coffee — it’s not everyday you get to meet with the 9th best barista in the world.
September 1st, 2016: Kalle wrote me back: “Enjoy your long weekend! Would you need some Sudden with you? I can Uber Rush you if you’d like. ;)” So of course, I rush ordered some Sudden Coffee to my home to try over Labor Day weekend.
In the same thread, we set up our first meeting for the next week on September 7th, 2016. With some Sudden Coffee in hand, my fiancée and I got away to the mountains for the weekend, as we hadn’t taken any time off after a particularly busy summer.
September 6th, 2016: I emailed Kalle before our first meeting with the following: “I loved it, my fiancee loved it, and I just gave one to one of my fellow partners… who loved it.”
September 7th, 2016: I met Kalle and his cofounder, Josh, for the first time at one of the best coffee shops in San Francisco. I won’t mention the name of it, though, so that I delay other VC’s swamping one of my favorite spots.
Josh, Kalle, and I did a taste test against several of the shop’s coffees and I couldn’t tell which was better — a good first sign for a no-brew coffee. I felt energized by meeting Josh and Kalle — they had smart perspectives but more importantly, I could sense they were great people. The three of us spent over an hour and a half talking — a great sign!
That night, I got home, did some more thinking, and emailed three of my partners and explained the potential that I saw that day. An internal email thread ensued between the sub-group of my partners and myself — looking back on it, my favorite line is: “When I was originally even thinking of cold emailing them, I thought to myself ‘man, everyone is gonna think I’ve completely lost it.’ But here are a few glimmers of greatness I see…”
And to the credit of my partners Saar and Devdutt, they both made time on their calendars to meet Josh and Kalle a day and a half later.
September 8th, 2016: The next day, I went to tour the Sudden Coffee production facility. It had been a while since I’d taken my last operations class (with the great Frances Frei) but what I saw impressed me for a startup that had only raised a small angel round. It might be tough to appreciate from the outside, but it’s rather difficult to make a product like this — no surprise that even with a smart team it took a long time for Sudden Coffee to figure things out. Not just that, there are still many more things to figure out as the company scales!
Later that day, I continued with my operations diligence. Among the highlights was a long call with my brother, who graduated with highest honors in his industrial engineering class from Georgia Tech, and he confirmed much of what I had seen for myself while also sharing some new operational insights. This was a key diligence moment for me (most people don’t know this, but Georgia Tech’s industrial engineering program has been ranked #1 by US News for 22 years in a row).
September 9th, 2016: Josh and Kalle came down from San Francisco to CRV’s Menlo Park office to meet two more of my partners. I wrote them a $100 personal check to cover their Uber ride down and back from San Francisco. I remember my two partners being impressed with their progress and insights, as well as Saar thinking the same in a longer follow-up discussion with me.
September 10th, 2016: as it was now the weekend, I went for a hike with my fiancée and we talked about Sudden for much of the hike. When I got home, I wrapped up the work I had already been doing that week and sent an investment memo to all of my partners. While it had all the requisite due diligence, I managed to sneak in some good fun with lines like this one: “I had to really grind and pull some shots to get [this memo] to you as soon as possible, given there’s a lot of ground to cover here!”
September 11th, 2016: My fiancée and I hosted many of our friends for brunch and a surprise coffee tasting. We gave them high end french press coffee, Sudden Coffee, and a few other coffee options. In the hot coffee category, Sudden Coffee tied with the high-end french press coffee. In the iced coffee category, Sudden Coffee was the sole winner.
September 12th, 2016: CRV hosted Josh and Kalle at our Menlo Park office. Right after their morning presentation, we had a partner-wide discussion on the investment opportunity. By the end of it, my partnership was ready to lead Sudden Coffee’s seed round.
Midday, I stepped out of our meetings and sent Josh and Kalle the following email: “Hey guys, I could pop out of my partner meetings and get there around 2pm at your offices to chat in person. Does that work?”
At 2pm, we had a great meeting at their headquarters and I dropped off our term sheet. Later that afternoon, my partner Saar forwarded some of our proprietary brand research to share with the Sudden Coffee team.
September 13th, 2016: By this point, several of the founders I have supported had a call with Josh and Kalle, some of whom spoke to them preemptively. I’m not sure what exactly was said, but I was so overwhelmed that no matter what was going to happen, they had made my day. Thank you once again to all of you!
September 14th: Josh and Kalle called me in the afternoon to verbally accept our term sheet (with a couple slight tweaks, like making more space for co-investors they wanted to add to the round). I figure the more the merrier, so I agreed to those changes, sent them a new term sheet later that afternoon, and wrote them: “As I’ve said before, I think you guys are great — as founders with lots of potential, but more importantly as people. That is super friggin’ important to me. So I’m looking forward to this journey together!”
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Conclusion:
Looking back on the timeline, I believe that having an open, prepared mind helped our process, as did actually trying the product and pushing things forward quickly.
While “the whole process” from first meeting to signed term sheet was a week start to finish, I think that distorts several of the things I mentioned that had already been in place to make that timing, and our investment, possible.
Note the role of luck and randomness throughout the entire process — how lucky I am (across the board!) to be engaged to my fiancée, how lucky to wrap up a prior investment process in time to be able to initially cold email Kalle and switch my focus entirely to Sudden, how Kalle and Josh were open to meeting, how two of my partners were willing to meet on short notice, how my little brother is brilliant at operations, how one of my partners had initiated brand research the year before to help plant a seed in my mind, and how lucky I am to work with incredibly supportive founders who called Josh and Kalle on my behalf.
And that’s only the luck I can see directly related to this funding round — for example, I could fill a separate blog post with how lucky I am to have parents who gave up everything in Venezuela when I was younger and moved to the United States to create a better life for myself and my brother.
But out of all the luck, seen and unseen, today I feel especially lucky to be working with Kalle and Josh as their lead seed investor, on behalf of CRV, in Sudden Coffee. I hope you enjoy drinking a hot or cold cup of Sudden’s coffee as much as I do.
— Rafael Corrales
