Benjamin Joffe
Mar 25, 2017 · 5 min read

Yesterday I came across this piece on VC Marketing. It lists notably:

  • Mary Meeker (KPCB), who brought the audience from her “Internet Trends” report from Morgan Stanley to KPCB. She has enjoyed every year a stage to share it, initially at the Web 2.0 Conference and now at the Code Conference. Her latest presentation had over 3M views.
  • Dave McClure (500 Startups), who organized multiple conferences and global tours (and also tweets)
  • Brad Feld (Foundry Group) blogs actively and wrote books
  • Marc Andreesen (a16z) who “tweetstorms
  • Jason Lemkin (SaaStr), SaaS-focused VC and heavy user on Quora
  • Mark Suster (Upfront Ventures) who blogs, tweets and now even snaps.

(I recommend reading the entire article for more details)

WHY REPUTATION MATTERS MOST

You’re not an established VC brand with multiple IPOs or an entrepreneur with a billion-dollar exit?

Then first, congratulations : you exist!

Creating a new VC fund is hard work so you were either a smart fundraiser, a successful entrepreneur, or picked by a wealthy family or corporation to lead their fund.

Now, here are some bad news

  • You are “third tier” by default, which means you won’t see the best startups until you find a way to change tier.
  • Startups take 6 to 8 years to exit on average, so a new VC generally takes years to prove itself.
  • With LPs, in particular (for your next fund), the only metric that matters is cash-on-cash IRR over the lifetime of the fund. Most likely you can’t wait for that.

Clearly, you have some work to do.

HOW TO GET VISIBLE

More good news is that being an investor and having money (= your own or raised from LPs) is already appealing to startups.

More bad news is that there are many more startups than unicorns.

How to find the best, or how to get the best ones to find you? There are a few ways to go about it:

0. Shortcuts

There are some shortcuts to a strong reputation: an early investment in a unicorn that exits fast (e.g. Oculus or Instagram), or “buying the logo” (= an investment in a unicorn at any stage and for any amount).

The first case requires pre-existing networks, a keen eye, and a lot of luck. The second mostly manages “optics”: startups who do their research will find out you had little to do with the birth of this unicorn.

What are the other ways? I know, it already sounds like work!

  1. Specialize

Many investors are quite “vanilla”. If you specialize, you can stand out. The specialization can be on particular sectors:

  • Jason Lemkin and Tom Tunguz (RedPoint) are focused on SaaS,
  • HAX is focused on early stage hardware (consumer devices, health tech, industrial and enterprise) and is now the world’s most active in this category (the focus on long-term verticals is the strategy of SOSV, the $300M global fund behind the HAX brand).

You can also specialize in an under-served financing stages.

  • DST was the first to focus on very late stage, offering to buy stock from founders and early employees without requiring a minimum ownership, board seats, or any form of control. Their angle was to find fast-growing category leaders worth billions, but that could be worth 10x later on. Those leaders didn’t have close competitors, had healthy metrics, and were executing well. This de-risked the investment significantly, despite its high price. It worked well for DST.
  • These days, an interesting stage could be the “second seed”. Typically, a startup raises another seed round when it is coming short of the key milestones and metrics that would open a Series A. For instance, some key R&D is not completed, or the product doesn’t show scalable growth. At this stage, the startup is having a Schrödinger moment: depending on who looks at it, it could be a future hit or a falling knife.

2. Offer unique resources

Many VCs are in Silicon Valley. That’s an advantage over the rest of the world but also a problem: they all live in the same ecosystem.

Some people say the job of a VC is to:

  1. Spot trends
  2. Make introductions

Many claim to be “smart money” but are often hard-pressed to be more specific. A few VCs try to offer concrete value-added support to their portfolio: a16z, for instance, helps with recruiting; 500 Startups has in-house expertise in marketing.

When HAX opened its doors in Shenzhen — the Silicon Valley for Hardware — it offered something no-one else did: access to an unparalleled environment for product development. Same when IndieBio (another SOSV accelerator) equipped a multi-million-dollar wet lab in downtown San Francisco.

Since then, HAX has added about 20 expert staff to support startups with design, electronics, mechanical, sourcing, strategy, distribution and more. It’s a “full-stack” program.

3. Show expertise

When I visited HAX in its early years and saw the work that was being done there, I realized it had a strong positioning, a unique advantage with Shenzhen, and already accumulated significant know-how. That — and the overall mission of SOSV and its people — is what decided me to join.

As first movers in hardware and being in Shenzhen we enjoyed initial visibility but I quickly realized our expertise was way ahead of our reputation.

So in addition to daily duties with startups, and shaping up our early curriculum (we are probably the most structured accelerator program today), we started:

  • Writing articles for TechCrunch (over a dozen to date)
  • Speaking at conferences (over 100)
  • Engaging with media (WIRED did a hit documentary about Shenzhen and HAX that is nearing 1M views)
  • and publishing reports.
The Silicon has left the Valley!

A few of those reports were modeled after Mary Meeker’s “Internet Trends”. We liked her reports and realized they were so broad that she could only dedicate a few pages to hardware.

Our “Hardware Trends” reports collected hundreds of thousands of views.

4. Share early results

When you invest in early stage, it can take a while until a startup reaches the “Valley Attention Threshold” (VAT?). Generally you need to reach a billion dollar valuation. If you’re not a US company, make it ten. From a startup’s inception that could take easily five years.

Another option for attention is to be growing fast in the Valley. But that’s not easy either.

One of our first investments, a booming STEM robotics company named Makeblock, just raised $30M. It is based in Shenzhen — where it is very famous— but won’t be notable globally until maybe 2019, when they might IPO in Shenzhen.

Since a 50 t0 100x multiple on revenue is common there, it will most likely be a “unicorn”. It will have taken 7 years. Funny enough (?), a profitable and fast-growing company doesn’t make headlines until they raise millions (though they might not need to).

Fortunately for HAX, our unique focus gives us a chance to get visible beforehand:

  • For consumer devices, Kickstarter has been a boon. Our startups have run over 70 successful campaigns, and 10 entered the world’s Top 100.
HAX can haz Kickstarterz

This is great. But HAX has expanded beyond consumer, and we needed to find ways to share that too.

  • For robotics, several of our startups like Simbe Robotics (supermarket inventory robot) or Dispatch (delivery robot) are now well known in the sector. And many more like Avidbots or Rovenso should be.
Rovenso’s rover eats stairs for breakfast with 100kg on its back
  • In the case of health tech, where it takes longer to market and visibility, we teamed up with Johnson & Johnson, and started talking about health.

WHAT NEXT?

Keeping top-of-mind is a daily practice. As new platforms emerge, be ready to embrace the ones most suitable to your business and personality. This might mean getting out of your comfort zone sometimes, like Mark Suster who embraced Snap and is now educating others about it :)

SOSV: Inspiration from Acceleration

Insights from The Accelerator VC—including our programs (HAX, IndieBio, RebelBio, Chinaccelerator, MOX, Food-X, dLab) & our startups.

Benjamin Joffe

Written by

Partner @ HAX & SOSV — Investors in 200+ Hardware Startups | Digital Naturalist | Keynote Speaker | Angel Investor | 18 years in Asia | Addicted to airports.

SOSV: Inspiration from Acceleration

Insights from The Accelerator VC—including our programs (HAX, IndieBio, RebelBio, Chinaccelerator, MOX, Food-X, dLab) & our startups.

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade