Suzanne Norris Of Victress Capital: 5 Things I Need To See Before Making A VC Investment
An Interview With Orlando Zayas
A mutual understanding of market dynamics and timing. There are countless anecdotes in the entrepreneurial community of exciting business models that were either too early or too rigid to ultimately find success. Eventually, these businesses were forced by the market to adapt in one way or another. A significant reference point that we look for when evaluating new opportunities is a clear articulation of why a particular business or business model is primed to thrive amid current or upcoming market conditions. We want to be able to engage with the founder to understand why now is the right time to bring this concept to market and how the team can benefit as a result of certain tailwinds or white space that exist.
As part of our series about “5 Things I Need To See Before Making A VC Investment” I had the pleasure of interviewing Suzanne Norris.
Suzanne Norris is the co-founder and Managing Partner of Victress Capital, an early-stage venture capital firm that invests in high-growth companies meeting the needs of the evolving consumer market. Norris is a former investment banker and developed ecommerce strategies for leading consumer brands including Kate Spade. She is a graduate of Harvard University and Harvard Business School.
Thank you so much for joining us in this interview series! Before we dig in, our readers would like to get to know you a bit. Can you please share with us the “backstory” behind what brought you to this specific career path?
It’s funny, if you had asked me 20 years ago where I would be today, I wouldn’t have imagined it would be early-stage venture capital, but I am grateful to be at Victress Capital. Prior to building Victress with Lori Cashman, I spent the first third of my career in advisory roles across investment banking, corporate M&A and management consulting. After working with clients in those roles for years, I became intrigued by the idea of going inside a company and taking on an operating role. So I moved to New York and took a job with Liz Claiborne Inc (LCI) where I eventually became their head of ecommerce. I was fortunate to spend five years at LCI, with the majority of time serving as Vice President of ecommerce for Kate Spade. I adored that brand and was fortunate to work with an incredible leadership team that was charged with invigorating the brand and expanding its omni-channel distribution.
After successfully growing Kate Spade’s ecommerce business, I left there to build my own consulting practice to work with smaller brands that wanted to develop ecommerce strategies that were brand building and revenue driving. After five years and a dozen clients, I met Lori and we instantly connected and found a shared passion in helping women entrepreneurs. Lori had built her career in private equity and had been researching the female funding gap, which in 2015 was largely as it stands now — female founders receive less than 3% of venture capital dollars. Lori and I believed that we could take our complementary skill sets, create a sourcing engine to identify talented female-led businesses that wanted to raise capital, and develop a thesis-backed approach to back them. And that is exactly what we did. Today, almost six years after launching Victress, we have backed 27 female-led teams that we believe are changing the status quo.
Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
I enjoyed reading Shoe Dog, a memoir by Phil Knight, because it’s an incredible story about how Knight built Nike, one of the most recognized consumer brands in the world. He recalls his roller coaster ride of entrepreneurship, highlighting all of the mistakes and lessons learned along the way. As I meet and partner with founders on a daily basis, Shoe Dog is a great reminder of what it is like to be in their shoes. Building a business is hard — it takes tremendous hustle, grit, focus and sometimes, a little bit of luck. Our job as investors is to stand alongside these founders and help them navigate the inevitable challenges and become stronger as a result.
Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?
My mother’s motto was “Anything worth doing is worth doing well.” This message has been a true north star for me throughout my life, from school to work to parenting. If you’re going to put time into something, make sure you commit to it and give it your all. It’s far more fulfilling that way.
How have you used your success to bring goodness to the world?
My early business success has allowed me to, with my partner Lori Cashman, form Victress Capital. We believe we are having a positive impact by identifying incredible founders who are building companies to address underserved markets that would have otherwise been overlooked. We champion these founders and are proud to help them launch and scale their businesses.
Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?
We believe that companies that are solving for tomorrow’s problems today must be supported. And it’s more than being diverse — it’s about knowing what to do with diverse perspectives so that you can drive better outcomes. VCs should recognize that underserved founders are most often the ones who authentically understand the needs and desires of the underrepresented consumer.
Can you share a story with us about your most successful Angel or VC investment? What was its lesson?
We are lucky to have many investments that we are incredibly proud of, but one that jumps to mind is Daily Harvest, a direct-to-consumer organic food delivery service. From day one, the founder, Rachel Drori, was focused on her mission and the path she needed to take to get there. She took time at the beginning to test a variety of business models so that she could nail the one that worked. This has made her capital efficient and allowed her to scale the business rapidly, yet strategically. Many times founders take capital without understanding the discipline of running a business, which is even riskier given today’s notion that access to capital is seemingly endless. Based on Rachel’s unwavering focus on her mission and her disciplined execution, Daily Harvest just closed on its Series D round, raising $77M at $1.1B valuation. With this new round of funding, we can’t wait to see Daily Harvest continue to deliver on its aspiration to do more good for people and the planet.
Can you share a story of an Angel or VC funding failure of yours? What was its lesson?
- Victress backs early stage founding teams and despite our expertise, we can’t perfectly predict how the founder will build a team to scale. We’ve seen companies falter when the founder hasn’t assembled the right team or has the wrong instincts. Often a founder does a good job of recruiting but a poor job of retaining talent.
- No founder can do everything. The most successful founders have an incredible idea and come to the table with deep knowledge of some area of the business. They need to surround themselves with people who compliment their skill set. Founders who have the right instincts on talent, delegate responsibility, and avoid micromanagement are able to empower teams that will ultimately enable them to scale and succeed.
Can you share a story with us about a problem that one of your portfolio companies encountered and how you helped to correct the problem? We’d love to hear the details and what its lesson was.
We invested in The Nue Co in 2017. The founder had a very complex supply chain across two continents and these were areas she hadn’t dealt with in the past. My partner, Lori, who has deep expertise in these areas, jumped in to help. She built a model that laid out all the steps in the supply chain, including the implications on working capital of varying levels of inventory. In transitioning ownership of the model to the founder, the founder developed a deep understanding of how these variables come together and it allowed her to build a more resilient supply chain as a result. Once she solved this critical component, she went on to successfully raise several rounds of capital, and we recently had a very compelling realization on our investment.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?
As early stage VCs, we are maniacally focused on knowing consumer trends, specifically within the spaces that we invest, which include tech-enabled products, services and marketplaces. We typically invest in companies within their first 12 months of launch, often before they are widely known by consumers. However, sometimes we miss the opportunity to connect with a founder when they are raising their first round of capital, so we have been more focused on being outward facing and building recognition within entrepreneurial circles. To this end, we have recently opened a second office in New York City and expanded our presence from Boston. We look forward to hosting events and continuing to build relationships with founders in our consumer ecosystem.
Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why. Please share a story or example for each.
1 . A passionate, high-octane founder that is determined to inspire change. We have met with thousands of founders since starting Victress, and some of the ones that stand out to us the most are the ones that demonstrate a clear drive and determination to make a difference in the world. There are several ways through which we have seen this, such as the founder’s ability to tell a compelling story of an opportunity in the market, the founder’s professional background and a logical path that brought them to where they are today, or even a personal anecdote that leads us to believe that they are unequivocally the right person to address the problem at hand. Alyce, now one of our portfolio companies, has a founder that instantly caught our attention.
In addition to being self-determined, we also believe that the best founders are ones that can influence and inspire change in others. It is clearer than ever that we are in the midst of a fierce struggle to attract and retain top talent. Accordingly, when we evaluate early-stage opportunities, it is critical for us to believe that the founder is able to motivate others to join them on their journey to inspire change. At Victress, we believe that a key piece of the human capital equation is having at least one woman on the founding management team, and we are thrilled and honored to have worked with our founders to create more equitable team compositions within our portfolio.
2. A differentiated product or service with inherently defensible attributes. One of the most important criteria we look for in any prospective investment is the differentiation that the product has compared to existing solutions on the market. Oftentimes we get the most excited when there is no great competitor benchmark at all. Before we met the Alyce team, we had identified the $120B corporate gifting market as one that was ripe for disruption as it was highly fragmented with little to no differentiation among the category leaders. The Alyce team saw an opportunity to personalize these gifting moments and built an AI-powered smart gifting platform that uses its proprietary technology to drive greater impact through a relational, recipient-first approach to gifting. As a result, it has quickly gained traction in the corporate gifting market and is realizing strong retention among its client base.
3. A resilient business model with demonstrated traction, attractive unit economics, and a path to profitability. A key part of our evaluation criteria at Victress is building conviction that a company has product market fit. Most often, we invest in early-stage companies that are post-product and post-launch, which gives us more data points on market traction. There are a few reference points that we commonly use. For a company like Alyce, which has both enterprise and consumer-facing components, we evaluate common metrics such as committed monthly recurring revenue, annual recurring revenue, and annual run rate revenue to get a better sense of current operations and the company’s future trajectory. Similarly, we spend a significant amount of time analyzing a company’s customer data, where we evaluate metrics such as customer acquisition cost, customer lifetime value, new logo acquisition, existing logo churn, and renewal rates. Evaluating metrics like these helps us understand a customer’s desire to pay for this type of service, as well as forecast the amount of capital that a company might need to raise to reach its desired milestones. Ultimately, the goal with any of our companies is to reach profitability, and we believe that a thoughtful and realistic articulation of the steps to getting there is crucial for any company in which we invest. In service of promoting capital efficiency and eventually reaching profitability, we look for business models that are inherently resilient and can stay nimble in response to unforeseen market conditions.
4. A mutual understanding of market dynamics and timing. There are countless anecdotes in the entrepreneurial community of exciting business models that were either too early or too rigid to ultimately find success. Eventually, these businesses were forced by the market to adapt in one way or another. A significant reference point that we look for when evaluating new opportunities is a clear articulation of why a particular business or business model is primed to thrive amid current or upcoming market conditions. We want to be able to engage with the founder to understand why now is the right time to bring this concept to market and how the team can benefit as a result of certain tailwinds or white space that exist.
With Alyce, its smart platform has always enabled enterprises to develop better relationships with its clients, but in the past two years, the tailwinds from the pandemic accelerated Alyce’s demand as people were not able to meet in person. The need for enterprises to be able to connect with their current and prospective clients virtually in an authentic and engaging way became critically important, and Alyce has continued to provide a differentiated and compelling service for its clients.
5. A roadmap for raising and spending capital. When we work with founders, one of the things that excites us the most is the prospect of building a long and fruitful relationship with the business. Accordingly, as investors, we want to make sure that we can offer the capital and support that will propel the company’s growth. To this end, we get excited when founders work with us to outline the company’s current and future capital needs, as well as the expected benefits of using those proceeds to invest in particular aspects of the business such as technology, product development, or human capital. With the Alyce team, we were investors in the Series A and B rounds, and I have a Board Observer seat, which has enabled Victress to work closely with the leadership team to determine the best use of capital and ensure that they are building a solid foundation that will allow the company to successfully scale.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
I believe that by providing capital to traditionally underserved founders, who are addressing underserved segments of the market, we can spark something bigger within the business community. The more that young people see themselves reflected in successful people across industries — from business to the arts to education to government — the more that they will feel part of an inclusive society.
This was really meaningful! Thank you so much for your time.
