Series A Academy: A chat with Reid Christian, General Partner at CRV

How are investment decisions for Series A made? Which are the hottest industries VCs are looking at? And how can founders evaluate whether an investor is a good match for them?

We tackled these key questions and others in our latest Series A Academy event with Reid Christian, General Partner at CRV, moderated by LAUNCHub Ventures General Partner Stanislav Sirakov.

Series A Academy connects you to investors and industry leaders through interactive online events. For founders, this is an opportunity to get the most pressing fundraising-related questions answered.

Based in Palo Alto, California, CRV is one of the longest-running venture capital firms in the world, having invested in more than 500 enterprise and consumer startups in its 50-year history, including Dropbox, HubSpot, Patreon, and Twitter.

At CRV, Reid leads investments in early-stage SaaS startups and helps them fight through the market noise. Reid’s portfolio includes Bulgarian Gtmhub, as well as Automox, Carrot, Chromatic, Factorial, Postman, Squire, and Vercel.

In case you missed this edition, we summarized some takeaways of the webinar below.

What are the differences between the US and European startup ecosystems?

One key change in the last several years noticed by Reid was that entrepreneurs are increasingly launching companies in their country of origin. In the past, the US and Silicon Valley, in particular, used to attract more founders from around the world. Instead, many entrepreneurs now open offices in the US only when they decide to target the market commercially. For some VC firms including CRV, this also meant a shift in strategic focus, from local-based to startups founded anywhere in the world.

Reid further noted some cultural differences he found, including more scrappiness with European, and particularly East European founders:

“Because maybe there hasn’t been as much access to capital earlier on, founders in Eastern Europe have to do so much more with less to get the business off the ground.”

What continues to be a strong point for the US compared to other ecosystems is the network effect, created in part by entrepreneurs encouraging each other to tap into funding opportunities, and in part by tech and day-to-day life being more intertwined.

A look behind the scenes: how are investment decisions for Series A made?

For CRV, two things take priority in making investment decisions: “Is there a founder-market fit?”, followed by “Can this be a multi-billion market company?”.

First, it is important for entrepreneurs to show how they are uniquely positioned, and which unique insight they have for the market they choose.

“That’s what leads us to founders who scratch their own itch, and start a company that solves a problem they have seen on the day-to-day,” Reid explains.

The other question investors ask themselves is whether the company can be a $10B one. For the venture model to work, there is a need for companies with potential to become the new DoorDash, Twitter, and HubSpot to drive returns that compensate for those companies in the portfolio that don’t make it.

“We spend a lot of time talking about how big a company can become.”

Which are the hottest industries that you are following?

One hot industry on the enterprise side is data infrastructure — anything from ETL (Extract, Transform, Load) to storage.

“Every company is turning into a tech company. Every tech company is collecting a lot of data, and what they do with it and how they actually run their organization is a very difficult challenge. As a result, there’s so much product innovation happening in the data infrastructure space,” Reid shared.

Fintech is another hot industry, at the intersection of enterprise and consumer markets. One driver is the huge globalization effort undergone by the payments banking infrastructure. Also, as consumers, we transact digitally more than ever before.

On the consumer side, the creator economy is finally here:

“We’re early investors and Patreon, and we’re very early actually in helping creators monetize with subscriptions. It’s been apparent over the last two and a half years that this is a massive industry. Helping creators create their content, build their communities, and monetize their work creates one of the fastest-growing markets out there,” Reid highlights.

How can founders evaluate whether an investor is a good match for them?

To save time and find the best investor match for their goals, Reid advises entrepreneurs to commit some time for initial research. It can start with researching VCs on their websites and ecosystem platforms, then narrowing it down to individual investors.

You need to know if the investor you are targeting is considering your vertical, but also geography and stage. Are they typically leading Series A rounds? And if so, do they have a competitor of yours already in the portfolio?

“A bit of research initially will go a long way, and save entrepreneurs a ton of time.”

Founders should also go into the initial pitch with some qualifying questions on their side, including:

• How do you work with founders?
• Do you typically lead rounds?
• Do you take board seats?

Finally, you should look for references on the respective investors, particularly from their entrepreneurs:

“Make sure you hear firsthand how they are working with investors. What has been the cadence? What has worked? What hasn’t worked? How did they respond when things didn’t go well?,” Reid said.

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We will be taking Series A Academy into 2022, with exciting new discussions featuring top-tier investors. Stay tuned by signing up for the LAUNCHub Ventures newsletter.

As the ecosystem in Southeast Europe matures, LAUNCHub Ventures aims to help founders in the region get ready to fundraise and scale. Just recently, we had the final closing of our new €74M fund. So, if you are interested in fundraising, you can start by filling out this form and telling us more about your startup.