The Framework

Success in early-stage venture capital requires building conviction. Here’s a framework to help you do exactly that.

Image for post
Image for post
Photo by geraldo stanislas on Unsplash

To succeed in early-stage venture, you need conviction. Simply put, what do you need to learn and where can you collect information to get comfortable with investing in a startup?

The venture capital conundrum, however, is we do not know the degree of our success until far into the future. Post-investment, the name of the game is portfolio support. But supporting a poor investment is an exercise in futility. It poorly allocates time, resources, and capital. Therefore, it is imperative to effectively stress test the quality of a business before investing. To do so, you need a framework.

The black-and-white framework we hear about early in our careers is a combination of three key factors: market, founder, and product. …


The Thesis

Aquaculture is a quickly growing market with potential to produce protein with a lower carbon footprint and less damage to our oceans. With that growth comes opportunity to invest in its continued success.

Image for post
Image for post

I’m now a rising second-year MBA student at The University of Chicago Booth School of Business, and have spent the last quarter conducting a deep dive into aquaculture as part of my summer internship with Cultivian Sandbox Ventures, a Chicago-based venture capital firm that invests in innovative entrepreneurs and technology companies building the next-generation food and agriculture system.

Consumers’ appetite for seafood won’t diminish any time soon. In fact, since 1961, per capita seafood consumption has increased by more than 60% in North America. …


The Thesis

Restaurants that successfully transition to an omnichannel approach will lay the foundation for the next generation of dining experiences.

Image for post
Image for post
Photo by Jason Leung on Unsplash

Facing restaurants today is a major crossroads: transform or perish.

Before the pandemic, millennials’ dining preferences were already a major headwind for the restaurant industry. According to a study conducted by global law firm CMS, 47% of millennials want to be able to order food at a restaurant before arriving, and 38% cite cost as an important criterion for choosing a restaurant — essentially high(er) tech at low(er) cost. Read between the lines, and this translates to shaving points off an already slim margin — on average, typically 3–5%. Sure, millennials are only one of several restaurant-going generations. What’s more, they only spend 13% of their income on restaurants and bars. …


The Feature

Employee engagement worldwide is stagnant — Cornell Tech founded Grow may be the answer to solving that problem

Image for post
Image for post

According to a 2018 study conducted by The Predictive Index, the vast majority of employees enjoy receiving feedback. However, 44% of managers overlook this trend and give too little feedback, if any. A Zenger and Folkman study published in the Harvard Business Review also found that 92% of respondents agreed that negative feedback, if delivered appropriately, is effective at improving performance. StartU COO J.P. Bowgen sat down with Ryan Sydnor, Founder of Grow, to unpack these phenomena and learn how Grow is redefining the way we share feedback and grow together.

Growing as a founding team

Before meeting at Cornell Tech, Ryan Sydnor and Richard Hill, Co-Founders of Grow, had a combined 15 years of experience as technologists at feedback-forward companies like Epic and Bridgewater Associates — the Connecticut-based hedge fund renowned for its culture of hyper-transparency. Upon starting at Cornell, both were surprised when they mostly stopped getting feedback in graduate school. …


THE THESIS

Startup success comes from customer acquisition — quickly, cheaply and at scale. Exclusivity delivers on all three.

Image for post
Image for post
Photo by John Schnobrich on Unsplash

The formula for success in early-stage is customer acquisition — quickly, cheaply, and at scale. Social media is a pillar of many startups’ customer acquisition strategies, even in a concept’s earliest days. As social media marketing has matured and branded content has proliferated, startups have fought an uphill battle to differentiate themselves in a sea of virality and buzz. A dollar today needs to go farther and work harder for consumers’ eyeballs and more importantly, loyalties.

Compounding the challenge is the consumer’s waning attention span. In 2018 and 2019, 12–16 second ads made up nearly 50% of YouTube ads, and 6–7 second ads were the third most utilized format, making up nearly 20% of 2018’s ad distribution. …


Alexa von Tobel is the Managing Partner of Inspired Capital and Founder of LearnVest, a company she founded in 2008 that was acquired by Northwestern Mutual in 2015. I had the pleasure of sitting down with Alexa for a virtual fireside chat with The University of Chicago Booth School of Business Entrepreneurship & Venture Capital Club. Here’s a recap of what proved to be one of the most valuable and insightful 30-minute conversations in recent memory.

Image for post
Image for post

Lean into the pain — that’s the attitude guiding Alexa von Tobel and her Inspired Capital team.

For aspiring entrepreneurs, the dilemma is not necessarily when to start a business — it’s should I start a business. It’s no easy decision and no matter your expertise, taking the plunge into a new venture is risky. But in the eyes of two-time entrepreneur turned venture capitalist Alexa von Tobel, it boils down to one simple truth. …


Image for post
Image for post
Photo by Campaign Creators on Unsplash

Consumer spending will take a significant hit during and after the coronavirus pandemic. Purchase behavior was already shifting online, with venture capitalists lauding investments in direct-to-consumer startups that (seemingly) had the foresight to anticipate the change. Coronavirus will accelerate that shift.

But what happens to startups without a strong direct-to-consumer function?

In a previous post, I lauded Andy Dunn’s wisdom about DNVBs — digitally native vertical brands. Maniacally focused on customer experience, these brands established an online-first approach to acquisition and retention. In the current coronavirus world, they are well-equipped for business as usual — at arm’s length.

However, in a post-pandemic business environment, startups that transition to a digital-first sales approach will position themselves for success. …


Image for post
Image for post
Photo by Marcin Kempa on Unsplash

Brick-and-mortar retail’s current steady state

The jury is still out on the future of retail. Between digitally native brands, retail-as-a-service, and cashierless checkout, the components are (almost) all there. But a successful future of retail will require a total deconstruction of the brick-and-mortar business model we’re all too familiar with today — a future comprised of a sum of the parts.

Put succinctly, in retail, there are a handful of ecosystems to rework.

At Macy’s, we talked a lot about retail-as-a-service as the future of our business. Three investments highlighted our conviction: Market by Macy’s, STORY and b8ta.

For the purpose of this article, let’s use one as an example, and call it Project…


Image for post
Image for post
Photo by Ricardo Gomez Angel on Unsplash

Brand loyalty has never been more fluid. Where delivery apps command attention, speed and convenience are a brand’s core value add. But remote differentiation might change that.

A typical consumer’s smartphone home screen likely houses DoorDash, Uber Eats, or another of the many food delivery apps. The proliferation of delivery services amounts to a ~$123 billion global market as of 2020, and with 14.2% year-over-year growth, it shows little sign of slowing down.

The battle for home screen space translates into competition for brands on these apps — for eyeballs, for spend, and for loyalty. …


Image for post
Image for post

Contrary to popular belief, time is not the greatest gift you can give someone. Mental capital is.

The term mental capital is not used in venture — it’s exclusively reserved for far corners of psychology and economics. The term was first introduced by economist Lok Sang Ho in his book Principles of Public Policy Practice, but to put it simply, mental capital is the totality of an individual’s cognitive and emotional resources. (Thanks Tom Kirkwood and team for that concise definition.)

You’ve heard the endless litany of jargon venture capitalists use to define investment performance: cash-on-cash, IRR, traction. What those words seem to inherently lack, however, is customer-centricity — a deliberate focus on the user of your investment. At the end of the day, the customer is always right, but not every customer is looking for the same thing. The metrics that work for consumer brands don’t necessarily work for software companies, and you can’t always apply healthcare metrics to a fintech startup. …

About

J.P. Bowgen

VC Senior Associate.⁣ Chicago Boothie. ⁣ ⁣Professional wino. Master scuba diver. Recreational foodie. Wannabe country singer.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store