Dear Founders,
Many of you know Dave and me already. For those that don’t: two guys walked into a conference at the Fairmont Hotel in 1996, bonded over music and two companies and three VC funds later are still close friends and business partners. Hard to believe almost 20 years have passed since Dave and I first met. We were fortunate to have co-founded two successful startups together, Spinner and Grouper/Crackle, with very different arcs. Spinner was a rocketship all the way to its acquisition by AOL for $320mm. Grouper was a hard pivot to Crackle with little capital raised and was acquired by Sony for $65mm. Two very different experiences that sculpted our brand of entrepreneurship.
Doing battle with YouTube at Crackle took its toll on Dave and me and was the catalyst for major change. As entrepreneurs, we had no love lost for Venture Capitalists. No offense to our colleagues. The best relationships were non-invasive and the worst were dysfunctional. We felt like no one got us. So we started investing in 2009 to see if we: 1) could make a difference, 2) liked it 3) could cede the reins to the founders and 4) didn’t suck at it.
We answered yes to all four questions and launched Freestyle in 2011. Every time before we raise a new fund we ask ourselves whether we still matter, especially now, as there are a shit-ton of seed funds. If we ever answer “no” to that question, Freestyle will be euthanized. Since we are announcing our third fund, it’s not a surprise that we are still big believers in our ability to add value to the startups we fund (and some we don’t). The feedback from many of you, friends and peers has reinforced this belief.
Throughout this all we still felt we were missing one vital ingredient, and lucky for all of us, we found it. Serial entrepreneur Jenny Lefcourt joins Freestyle as a Partner in Freestyle Fund III. Jenny dropped out of Stanford B School in 1998 when she received funding from Kleiner Perkins to start the first online, aggregated registry, WeddingChannel.com, which sold to theKnot for $80mm. She also cofounded Bella Pictures and angel invested, advised and consulted for many start-ups including Minted, MainStreetHub, MomentFeed, StyleSeat, and Loverly while birthing and raising three kids. Jenny also brings a wealth of experience in marketplaces, e-commerce, fund-raising, brands, and working with founders. Alongside Molly Anawalt, our unflappable, irreplaceable ops manager, Jenny completes Freestyle.
Since the partners at Freestyle collectively have founded 6 companies in wildly different segments with different management teams and investors, we have experienced many of your challenges. We have founded startups in music, video, media sharing, group messaging, e-commerce, marketplaces, Influencer monetization, health and smart toilets. We haven’t faced every challenge you will face, but have experienced enough to be dangerous.
We don’t play games. As entrepreneurs, Dave and I hated when investors would mess with our heads by not giving us a feed of quick, transparent, useful data about our startups, pre and post-funding. Between the 3 of us, we have likely received over seventy fundraising “NO’s”. We don’t have private conversations with other investors about you (except if you do something really bad) because we hated when that would happen to us. Everyone has an agenda but we pledge to share ours with you. We want to demystify venture for founders, so ask us anything and we will give you an honest answer.
True Fact: At Spinner, one of our investors/board members, in order to gain more control over our startup, started a movement to demote me while telling me to my face that he was thrilled with my performance. In a fight for my life, I suggested that the board take the pulse of the other Spinner execs to gauge their support for me. The team unanimously backed me, the demotion was put to a board vote and the board voted 6 to 1 against. I tried to organize a buyout of the rogue investor’s shares but failed, only to sell Spinner 6 months later for $320mm (which was the biggest win in that investor’s portfolio). It was a massive waste of time and focus and sadly none of the other investors came to my defense until the very end.
We help you fundraise. We work with you to unearth the highest value-add investors for your Seed round. Give us your dream list and we will tap our network and evangelize you, as if it was our own company. Just as we did when we were founders, every time you raise a round of funding we also challenge you to decide whether its time to exit or continue to swing for the fences. (experienced 22 acquisitions, 4 of our own and 18 in our portfolio). Of course it’s always your call, but this simple exercise can be revealing. If you choose to exit, we work with you to optimize that path, down to negotiating with potential acquirers. If you choose to swing, we coach you throughout the Series A process — timing, pitching and once again, getting you in front of the best investors for you and your business. Most of the time our agendas are totally aligned, but when they aren’t, we are transparent about that too. No guessing. No mystery.
We are an extension of your management team. Between the three of us, we have led product, marketing, sales, BD, ops and finance. We get dirty with you in all of these areas. We are proactive vs. simply attending board meetings and letting you know you can call us ‘when you need’. We have negotiated deals for you, recruited for you, debugged for you, financial modeled for you, pitched press for you….we live vicariously through you.
True Fact: One of our companies was struggling to ink its first deal with a media company. Since there wasn’t a BD person on the team, I offered to step in and help. I emailed Mark Cuban, owner of HDNet (among other things) and proposed a deal. Amazingly he actually responded and after a few email negotiations we had our first deal, which was exactly the catalyst the company needed.
Our network is your network. Whether you need intros to customers, experts or potential investors/acquirers, the three of us have been part of the start-up ecosystem for almost 20 years as entrepreneurs and now investors. We have 200+ ex-employees running around, unknowingly waiting to help you accomplish your goals. We don’t just stop at the intro, being operators, we help you drive to whatever outcome you want with our contacts.
We have your back. We want to be the first call you make when you have great news and more importantly the first call when you have shitty news. We don’t kick you when you are down. We are here for the good, the bad and the ugly and believe in you at times even when you may have lost faith in yourself. We do have war stories, lots of them.
True Fact: We invested in the Seed extension for a company and I showed up at the first board meeting with high expectations. The board proceeded to beat the shit out of the CEO in the meeting. I asked the CEO to step out of the room and after a WTF conversation with the Board convinced them that allowing me to coach the CEO would likely be more constructive than another public shaming. 3 months later the company was acquired and everybody won.
We are good therapists. You laugh but the truth is coaching (life, personal relationships, founder dynamics, management, loss) is a huge part of what we do. This may actually be the most important interaction we have with you. We don’t shy away from the tough conversations (no judgement), no matter how unrelated it may seem to your business, that make you better founders. It sure helps that we’ve been through the high highs and the low lows as founders ourselves.
True Fact: One of our companies received a fantastic acquisition offer. The only catch was the creation of a 3 month window between the signing of the deal and the closing. After the deal was signed, the company got cold feet and started playing mind games with the startup’s founders. The company opined “We don’t think you belong here.” and “We don’t believe you are a strong enough leader”. The founder and I had intense weekly sessions to move away from personalizing the attack to manifesting what the founders’ goals were with the sale. The company was acquired and the founders are set for life.
We can see into the future. And some of you will win and some of you won’t. The good news is that we will be there with you for all of it. ☺
