Enterprise fundraising advice from 3 New York VCs
As you no doubt know from our Q1 Seed Report, New York investments continue to heat up. And last night, Work-Bench’s Enterprise VC Fundraising Trends panel hammered that home. In front of a packed house, our own Crissy Costa joined Graham Brown (Partner, Lerer Hippeau) and Vipin Chamakkala (Principal, Work-Bench) in an engaging conversation moderated by Fortune’s Polina Marinova. Key takeaways on how to navigate enterprise fundraising below.
Enthusiasm sells, exaggerated claims don’t
To start, some perennial advice for founders. Nix saying “We don’t have competition” during a pitch. Graham has heard it one too many times and rarely is it true. Touting indefensible growth projections? Also no good.
All three investors nodded at the notion of a “tech hype cycle” after being blown away by an initial conversation with a driven founder, but humility goes a long way. “Founders who know their markets well but also know what they don’t know” continually stand out to Crissy. Being passionate, obsessive even, about your company is one thing, but early in the game, you don’t need to pretend you have all the answers.
Focus on momentum versus metrics
Vipin asserted “We’re the anti-metric VC,” when asked about what metrics matter to Work-Bench. He wasn’t alone. Crissy echoed that she often “ignores metrics,” advising early-stage founders “[not to] get hung up on metrics, as momentum is a better signal to investors” coupled with execution and attracting/hiring a great team. Graham added that he “love[s] to spend time with customers as much as possible” as a way to evaluate an opportunity, with Vipin revealing that consulting with customers can be the “№1 way to understand whether it’s a big problem” the company is looking to solve.
Timing, unsurprisingly, is also everything. Crissy always asks, “What is happening in this point in time that makes this a unique opportunity?” Rather than focus on metrics which will no doubt change, she factors in whether a company is a “vitamin” vs. a “painkiller.” The more painful the problem is, the easier the sale, and the more likely it is that a startup will become sticky and reduce customer churn.
It pays to start small
Crissy has noticed an uptick in multi-stage firms looking to get involved at the seed round. “The Softbank effect effects everything,” Vipin confirmed, with Graham adding that ‘the most attractive opportunity is to go slightly earlier, [as] everyone is getting squeezed by someone slightly larger than them.” Whether you’re looking for pre-seed, seed, seed+, seed II capital (or any other stage you want to throw in the mix pre-A), choosing a dedicated early-stage VC comes with its benefits. As a seed stage investor, Crissy focuses on creating symbiotic relationships with multi-stage investors. “The more we can help founders reduce time fundraising, the better.” Does anyone care to argue otherwise?
For more insights from last night, check out this great post from Lerer Hippeau.
Thanks to Work-Bench for hosting us, as well as Graham Brown, Vipin Chamakkala, and Polina Marinova for engaging in such an insightful discussion.
