#WFH: Completed My VC Firm’s First Investment From A Virtual Setting

Everything from start to finish — meeting founders, internal discussions, diligence and partner meetings, was all virtual.

These past few weeks have been different to say the least. Health concerns aside, the second biggest impact has been on how businesses function. People are finding it difficult to cope with closed environments, especially within the context of work.

The measure of intelligence is the ability to change

— Albert Einstein

But there’s never been a better time to work from home. Online tools have made collaboration seamless while improving efficiency and output. Personally, I will vouch for three MUST HAVE tools for all VCs — Zoom, Affinity (CRM), Slack/Workplace or any variants of these three. For this particular deal, I also ramped up my activity on Whatsapp, to communicate quicker with the founder.

Let me confess something at the outset — I love working from home. It saves me travel time and I’m able to concentrate better in isolation. There are fewer distractions.

Have investments slowed down?

Yes.

Where is the focus right now?

Portfolio companies.

Are you still going to make investments?

Of course.

Did you make an investment?

In fact, we did.

Was the process any different?

Yes. Slightly.

Was it difficult?

Not really.

Let me elaborate on this.

Sourcing

Interestingly enough, I came across this startup when I was conducting a competition analysis for another company, whom I had previously met in February. Turns out, this startup had a unique business model…so I proceeded to reach to out to the founder via LinkedIn. We connected and a few hours later, I set up a virtual meeting. Funny how quickly things can move in the VC world.

Diligence

From there on, it was the usual drill — speak to the founder, share notes internally, research relevant information to provide further clarity on what the opportunity looks like in the context of the firm’s value proposition and lastly, discuss the deal in greater detail during the investment meeting, which usually takes place every Tuesday and Thursday.

We moved pretty quickly on this deal. Typically we take anywhere between 2–3 weeks, but we wrapped this one up in under ten days. So what changed?

• Extra partner meeting: The process of diligence didn’t change at all (it was as extensive as any other investment we’ve made), but the timelines did. Probably the biggest change came in the form of scheduling an extra partner meeting during the week to proceed quickly and make a decision. That’s about the only significant difference in the process.
• Text vs Email: I decided to swap emails for text messages with the founder (for quick communication on mundane requests). It’s also a great way to learn about founders and their communication styles. In all of my experiences, messaging or calls provide faster clarity on certain elements compared to exchanging email…which in all honesty we can make do without. This has happened once previously as well. The founder and I were sitting and chatting about the business at 2am!
• More time on hand for everyone: For some reason, I thought speaking to people during this period would have been tougher, given that they are at home, and most have families and children around them. But to my surprise, people were flexible with their schedules and open to speaking late in the evenings/early mornings, which doesn’t usually happen.
• No commute = extra time: Personally, I didn’t waste time commuting back & forth mtgs/work. I usually spend 30–40 minutes on public transport. I ended up having more time on hand to conduct diligence (loved this!). That extra 1.5 hours could mean more sleep, rest, lunch time, relaxation, work time or anything you want it to be to focus better.
• Built a rapport with the founder: Cannot stress how important this is and something that was a result of swapping emails for texts/calls. Investments are relationship-based. Building trust in general is difficult, let alone doing so in a virtual environment. But something that worked for me was scheduling 1-hour calls (even when I knew my questions would not run longer than 30). We typically take 2–3 meetings with founders before diving deep into diligence. So my 1-hour calls became more about getting to know the founder. Learning more about things that mattered the most to him, talking about culture –– building and scaling the company, how he thinks about managing his employees during this difficult period etc. This gave me a glimpse into what we call ‘founder mentality’. What are some of the success factors that this founder exhibits? On a side note, the two of us also bonded on our mutual love for the same video game titles & soccer (he brought this up … always helps to do your research!)

Yes, it was a different experience and being time sensitive and research heavy also meant it added more complexity to the process. However, I’m a fan of remote collaborations and have executed projects successfully in the past working closely with teams from all over the world. Chalking out a game plan and communication were the two key elements in getting this over the line. IMO, it can be done, if you want it to be done. My suggestion is to get creative, find a routine, and most importantly communicate, communicate and COMMUNICATE!

Please leave your thoughts and comments below or share them via email (akash@scrum.vc). If you’d like to connect and talk, let’s do it. Reach me via — LinkedIn | Twitter | Instagram

About: Akash Bhat is an Investor at Scrum Ventures, an SF-based generalist VC firm investing in Seed and Series A startups. He is a former entrepreneur himself having run businesses (successfully & unsuccessfully) in India and been employee #4 and #5 at two startups in the US. Akash has Bachelor’s in Computer Engineering from PES University and holds a Master’s degree from Columbia University. He is also the host of ‘The Desi VC’, a podcast series where he interviews angel investors and venture capitalists investing in tech startups in India.