How to Get a Check Signed from Lombardstreet Ventures in a Few Hours
Lombardstreet Ventures’ new fund is active on the market since March 2021 looking for Seed-Stage companies to invest in. We made 19 new investments in the last 10 months and we are eager to know you.
We receive hundreds of emails — cold and warm — every week; we read them all, but we can reply only to a subset of them. Most of the time, if you don’t get quick feedback from us, your startup is off-target for Lombardstreet Ventures, and that’s why I decided to take some time to tell you what we invest in and how to capture our interest in your company. This article will tell you what we need to know from a startup before we become curious and decide to invest in its team.
What we invest in
We have been founders ourselves, with some failures and successful companies in the tech space. We invest in multiple markets, but we go for software companies 80% of the time. It’s what we understand best, having hired, worked, and suffered alongside software engineers for the last 25+ years.
Straight to the point.
We love SaaS, developer tools, blockchain, infrastructure software, open-source, marketplaces, all across multiple markets.
We also like aerospace and food tech — but we don’t have direct experience in the field. Occasionally we invest in agri-tech.
We love to invest in mission-driven builders before they reach Product-Market fit.
Our decision process might take a few hours to a few days — depending on the additional information we need from you and how impressed we have been with your pitch. Most of the time, we schedule just one or two 30 minutes Zoom calls and send you a couple of emails with additional questions.
Usually, the whole team is on the call to speed up the decision process. If we decide to invest, we will wire you the money in a few hours.
We mainly invest in post-money SAFE, we don’t take board seats, and we expect you set the company valuation and all the terms.
We expect you to move fast, keep us informed about any news in the investment round, and send us short and clear monthly updates after the investment — especially when things become challenging.
That’s us. If you want to make us interested in your company, we want to understand a few things about you.
Geography of Investment.
Before connecting with us, please read our website, look at our portfolio of investments, and, most importantly, be aware of our investment geography.
We don’t invest outside the United States. We invest in US companies — Delaware C-Corps — , aiming to achieve market share in the United States as a priority. Then the rest of the world market.
That is a significant plus if the founding team is in the Bay Area. Your team can be entirely or partially distributed, but we must say we love companies where the founders are based in San Francisco or Silicon Valley in general.
Why? Because, despite all you can read online, that gives you a significant advantage in building the network of people that will support your journey.
That said, USA companies are ok.
What problem are you solving?
This is always a pain point, and very few founders can effectively tell the problem they are tackling clearly and concisely. It would help if you took thirty seconds max to explain it before losing us. We need to grasp what you do early in the conversation. We don’t know your market and its problems. So please, take us to step by step into your world. No acronyms. No buzzwords.
If you can’t clarify what problem you’re solving at the first meeting, maybe you should work on it a bit more before reaching out to us — and probably anyone else.
Right problem, good market, wrong team is a classic mistake for a VC. If the market is big enough, there’s space for more than one winner. It would help if you could tell us why, among many others, you and your co-founders are the right people to solve this problem.
Remember that we invest in builders, not marketers.
How do you plan to get customers?
Startups aim to big markets; we all know that. But how do you plan to start? Targeting a TAM of $18B doesn’t say much. Big markets mean a lot of competition, so it’s a lot more interesting to understand how you get to acquire your initial customers and how you keep them happy.
How did you get your first 10 customers?
How will you get a large customer base in the first 2 to 3 quarters?
It’s a lot better if you have already tested your assumptions on the market when you come to talk to us. Seed funding doesn’t mean any customers and no revenue. We expect you are very early and have done experiments, possibly with promising outcomes. We know that the risk is still very high, but at least you have some data to support your thesis.
What did you learn about testing your product assumptions with real users?
How many users or customers do you have on the wait list? If you are pre-launch, that is a good indicator of people’s interest in what you’re building. Work on the waitlist since day one.
Do you have — at least — some initial provable traction to share with us?
The growth pace of your company is much more interesting for us than ARR. Remember that our interest is in how fast you grow — week over week growth rate is perfect — and a few weeks’ data — like 4 to 8 — are enough in most cases. Investing in a team without knowing whether customers need their solution or not is very rare. Not impossible, but rare.
If the market you are tackling, and the solution you find are one of a kind, then traction is not an issue.
Who are your competitors?
99% of the time, there are competitors already on the market: incumbents and newcomers. We want to be sure you did your research and are very familiar with your competitor’s products.
Did you try them out?
A comparison chart copied from some reports online is not what we expect.
It’s up to you to convince us that you can do better than your first competitor inline and that, most of all, your business will skyrocket in a few months.
Fast-growing companies often come from founders that can see things before others. Changes in social habits, regulations, and technology adoption can drive those fast-growing businesses.
What do you see that most of us can’t see yet? Drive us through and help us understand your unique vision of the world.
Recent examples of that have been cloud adoption by the enterprise or changes in regulation in California which allows people to cook and sell their food from home.
We love live demos, even if it’s something you don’t always see that much nowadays. And not just that: we love to try your product and experiment with your solution by ourselves. We know that it’s not always possible, but it’s always a plus for us.
We usually need a few basic information about your cap table. Tell us if you raised previous rounds, be transparent about potential problems, and tell us if you made any pivots with this company before.
The main question for us is how much ownership — fully diluted — of the company the founding team has before the current round.