#Slack-Off Recap: Kara Nortman on Getting Your Business Off the Ground

Every Tuesday from 1–2pm EST, WeFestival hosts business experts in our Slack community through our #Slack-Off series, a rapid-fire, ask me anything chat with our community. This week we brought in Kara Nortman of Upfront Ventures and Seedling to answer questions about those crucial first steps when starting a business. Read below to see the Q&A and join our Slack community to participate next week!

A Few Key Takeaways

When building your advisory board, look for people who are intrinsically motivated to help.

Do your research on your potential investors and get to know them over time. They may be in your life for over 10 years, so you want this to be a good fit!

Investors look for self-awareness, a willingness to learn, and resilience. Starting a company is hard and they want to know you’ll stick it out through the long haul.

When selling your idea, make sure to give a clear sense of the problem you are solving or new behavior you are creating, who is on the team to go execute against it, and a sense for your milestones in the next few months.

Read below to see full the Q&A and join our Slack community to participate next week!

Kara: Hello everyone! I am thrilled to be here. I am a partner at Upfront Ventures - we are the largest early stage VC in Southern California. We invest across the United States and occasionally overseas. We primarily invest in Series A companies.

My background: I started as an investor, then moved to a big company, then started a company and then returned to VC. So I have seen the ups and downs of lots of different environments.

I co-founded www.Seedling.com where I am currently chairman. At Seedling, I raised capital from Upfront Ventures, Greycroft Ventures and Google Ventures. Prior to Seedling, I spent close to seven years at IAC where I led Urbanspoon and Citysearch and co-headed IAC’s M&A group. Last crazy thing I did at IAC was help get Tinder off the ground (which came out of IAC’s mobile incubator called Hatch Labs). Prior to IAC, I spent time at Morgan Stanley, Microsoft, and Battery Ventures. I also blog at www.ventureinside.com (on Medium!)

BTW, the topic today is… “Starting your Business” — picking a co-founder, advisors, investors and any other important steps to get your business off the ground.


I’d love advice on building an advisor board. I’ve found some great people who’ve been helping me on my deck, strategy and thinking. Both are VCs, one I “met” here and the other I connected with through my college alumni network. When and how is it appropriate to ask them to be formal advisors? Is there an etiquette?

GREAT question. A lot of people rack up advisors as eye candy on a slide. While one or two credible people from your industry can help in that regard, much better to spend your equity wisely and get people on board who are intrinsically motivated to help. You can tell how intrinsically motivated they are to help if you are feeling comfortable reaching out for “free” help and they are responsive. I generally say once it feels like you are asking them for help often (more than a few times), then broach the advisor topic. Look for chemistry as well. And if you need to broach up front, mention it in the first meeting and ask them the best way to get to know each other to find out if it is a fit. Most people will welcome the transparency.

For advisors, what’s the right amount of equity to offer so that advisors feel like they have enough skin in the game? And how does that evolve as the company builds? As CEO, I’ve spent significant time finding the right sounding boards and I want them invested for the long-term.

General range is .1% to .5%, with average around .25% if you have a few.


I would love to hear your POV on picking investors, early stage friends & family and bigger angels. I have raised $300k friends and family and have a working private beta prototype and about to meet with bigger angels in 4ish weeks with our latest prototype and data & analytics.

So many founders think about raising money as the immediate goal and certainly it is when you need to keep the lights on. That said, if you have options and start early enough, it is so important to make sure you have the right dynamic with your VC, especially when you get into giving out board seats and high ownership percentage as you will be stuck with/thrilled to have your VC for 10 years in most cases.

Your VC will be at times be your harshest critic and your biggest advocate.

As a founder, I spent time getting to know my investors early and advise my founders to do this selectively as well. Do research, find out who likes your space (so much you can learn from bios, twitter, linkedin) and the style of that investor. There can be great investors (e.g., strong track records) with whom you don’t click. Your VC will be at times be your harshest critic and your biggest advocate. Sometimes this happens in the same meeting. They will help you recruit, fund raise, etc. So start early, build relationships before you need the money and do it in an efficient way for you and the vc (see above)

One last thing… Figure out what you most want/need right now. There will always be trade offs between investors who give you money and its just money (usually less dilution) and investors who give you money and more (time, sparing partner, help fund raising downstream). And understand the motivations of the investor. Most companies should not take money from big vcs as we look for big outcomes and small to medium sized outcomes are great for founders. Make sure your long term incentives are aligned.

Here’s a blog post I wrote on the topic as well if helpful.

VCs like resilience especially when it comes on the back of performance.

Do diligence on the VC if you can. Find out what they like to hear in that 30 minutes and if it doesn’t seem like they are biting at the end, ask them if they would like to follow up in the future and what they would want to see to circle back. VCs like resilience especially when it comes on the back of performance. And if they don’t bite then, move on and go kick butt without them!

My company is currently raising our first round of investment and we’ve been having a lot of productive conversations and people seem to be interested in participating in our first round, but it’s like they are all waiting for someone else to make the first move. How do we close on a lead investor? Do we ask them to lead? We need to create urgency without coming across as urgent.

Getting a lead is always hard, so know you are not alone. Key is competition and deadlines at the right time. In the first meeting you don’t want to give a hard deadline but give a sense of process (VCs will typically ask about process and valuation if they are interested). In that first meeting, message from you should be something like “just kicking off process, we are speaking to a handful of leads and looking to circle interest in the next month.” Again, ideally you have a list of people you have been building relationships to this point

Then as firms/investors are digging in, which is defined by multiple meetings and/or requests for data, start to put more pressure on the process. You can mention things like “we are meeting with partnerships now and expect to receive term sheets in the next 2 weeks” or just “we are circling on terms in the next two weeks, would be great to know where your process stands.”

And then if you really do like that VC or investor for a reason, let them know. It’s a combination of pressure and connection. VCs like to know they can win a deal for a reason (you are their target customer, you have a lot of experience in the space, you have strong chemistry). Like many things in life, we are motivated by the perception of competition and a feeling that we are winning for reasons other than being the last one standing

Any advice on how to get access to seed funding. We build a biometric sensor system for clothing. We combine the body, fashion, data analytics, and the Internet of Things. We signed a PO with a billion $ customer. We get approached by customers left and right. I’ve tried pretty much any approach re: fund raising.

In the beginning, you’ve got to try either people who have known you for a long time and willing to bet on you (seems like this would be made easier by your initial customer win). If you are getting a lot of nos, go back and ask what you could have done better. Find people who will give you honest feedback and then work on it.

There are also lots of crowd funding platforms where you can try to take it to the masses.

Resilience is probably the most important thing in the beginning and throughout.

And if you ultimately can get there after months of trying, see if you can get what you need other ways (giving away equity, getting a loan from your customer, etc). And if you still can’t get there, may be a sign. But if you have the conviction to do it, would push hard and creatively and ask for feedback to get better and better.

What are the most important qualities you look for in a founder & do you have key things you look for in a pitch or a personal checklist of things you want to make sure the founder has researched or understands?

The big question! I look for (1) self-awareness, (2) a life-long learner (because figuring out how to scale from small to big if successful is so damn hard even for people who have done it before), (3) resilience (almost all companies go through a life and death experience at some point, and the desire/ability moving through those moments is often the difference between winning and not). Then I look for credible teams that have some major advantage around the opportunity they are pursuing- deep industry experience, really great at product, brand builders, etc. I tend to be attracted to product oriented companies who are obsessed with their customer and develop regular creative ways to understand their customer and get better. And finally, I look for founders who inspire me and with whom I think I will be able to add value. This is usually around intangibles like chemistry. It should be felt on both sides. I will sometimes walk away from an opportunity just over chemistry as I want to make sure that founder feels great about taking me on as an investor not just in 2 months but many years down the road.

I have bootstrapped, and given 10% debt conversion for series A stock. next step up is a cap and serious angels. I want to retain the creative vision for something I have put so much into. I am not 100% sure how to handle, but I have the meetings.

I have a strong POV on this. If you plan to raise another round, get investors who will be helpful and ideally someone to price the round. Notes end up being difficult for founders at the next round. No one knows what they own, most have weird terms the founder didn’t understand. You kick the can down the road and create a more challenging situation at the next round. Many companies do notes and we invest after notes all the time, but something to consider if you have someone who cares enough to price. A lead who will price is also a sign to you and to the market that someone cares and has done work.

And to answer your questions more specifically, do diligence on your investors. If you are close to getting a deal done (when you know the investor is very interested), ask for references for other founders they have funded. Ask around in market. I had dinner with a new founder I am funding last night and she knew everything about me. I was impressed

Any advise on how to approach VC specifically for “smart money”? We are a startup looking for “smart money”, someone who can help us grow when it comes to building a team, developing a board. A quick background, we are about 18months old and have done $1Mill in sales with a 25% — 30% profit margin and are currently first to market. Since we are first to market what traits do you recommend we look for in VCs?

Hard to know exactly how to guide you as it will be specific to your industry. It looks like you have good early data points at the very highest level. I gave some thoughts on this above.. do research on vcs who are excited by your space and have the time/interest to dig in and get to know you. You can find this in bios, blogs, twitter, etc. Then try to find a common connection into the person and ask for an introduction.

Highest quality introduction come from fellow entrepreneurs who already have trusted relationships with smart money.

When one of my portfolio company founders or some other founder/operator I trust says something like “Kara, I would like to make an intro to x- great team I have gotten to know over x years, doing y now and hit a. b and c milestone.” I am interested if its an area where I have a passion. And I am the most interested when it comes from someone I really trust who doesn’t send me things all the time.

When you are starting your business and some components are still being flushed out- what’s the best way to “show” people what you are talking about if you don’t have something tangible/physical to show them? Like a website or a product… And describing it just might not do it either…

Giving investors a quick introduction that is time and medium appropriate. First gauge the “attention channel” you have- email, in person for 3 minutes, in person for 30 minutes. Then craft your message for that amount of time. Give them a clear sense of the problem you are solving or new behavior you are creating, who is on the team to go execute against it and a sense for your milestones in the next x months (picking something that is a year or less). This is a starting point and what is most important is then being able to return to that investor and say- I said I was going to do x and here is what happened. This gives an investor a sense of how you work and is likely to build a longer term option for you. It’s hard to get funded by new investors you have just met (esp institutional) so work on building a track record and report

First gauge the “attention channel” you have- email, in person for 3 minutes, in person for 30 minutes. Then craft your message for that amount of time.

You don’t have to do exactly what you said you would do- many companies test and evolve their business in the early days, but you can explain your thought process and give investors a sense for how you operate

Finally, the medium of communication is important. If email, make it simple and short with a clear description of what you do, who you are doing it with and milestones. You can end with a question around whether they are interested in staying in touch.


I’m in a very early stage and still getting the dream team assembled. When getting a co-founder team member and signing a pre-launch co-founder agreement, what type of equity-based deals are usually made that allow the rest of the team to secure their equity in case of bad performance of the new member?

Thanks for asking a great question! This is what vesting is for. Standard equity/options agreements are usually 4 years with what is called a 1 year cliff. This means if that hire does not work out in the first year, they do not vest. If the person is there after 12 months, they vest their entire first year and then move into monthly vesting. Also, be careful with the co-founder title. You can always give it out later and want to make sure you really feel like that person is a co-founder and not just giving it out to get someone on board unless you are sure you want them to play that role.

I’d love to know your thoughts on having a co-founder? It is really necessary to raise capital? I’m a sole founder and find I come up against this question often.

There is data on this, but no right answer (check out Noam Wasserman for data). For every rule and every piece of data, there is a counter example. I have companies that have 3 cofounders and companies that have 1 co-founder. If you are the kind of person who thrives off of others, then a co-founder can help (someone in the trenches with you on the good days and bad, can show vulnerability and problem solve at the most raw level together). If you are a person who thrives through your own internal process, then perhaps a co-founder will be less helpful (or even may take away from your founder superpower).

What is most important is to set up an environment that supports your psychology and then get motivated functional leaders in place.

Be self-aware and have a strong POV on why you don’t have a co-founder and then you can explain why you have taken this route.

I’d like to know about first hires. We are a two founder team, CEO/CTO. I’m thinking another developer and a junior marketing person.

Hard to answer in isolation. Generally, I tend to believe in the early days, hire when you feel extreme pain and after you have done that job yourself (so you hire for the right thing). If you have a skill set gap to go to market and get feedback on product, then hire for that. But many people over hire and create a burn situation early on before they have any idea what product/fit looks like. The only thing fatal to a start-up is running out of cash…

I am building an intimate apparel company and am currently recruiting a designer to help me create my first samples. I’ve had a lot of interest in my mission and cause and one designer I know from one of my alumni networks said she “wants to help” — for free. However I feel like i need to structure the relationship a bit more, to get a stronger sense of her commitment and set myself up right for the long term. Do you have advice for how to structure this and what I can offer her for her time…even though she said she’d do if for free because she is interested in the project?

Be transparent, tell her you’d like to keep her involved and motivated but you are light on resources now. Find out how she will define success or gratification for her. Always interesting to ask questions and listen. Sometimes just getting in the flow is enough for people and they will do a lot of work for free (saw this in the early days at Urbanspoon). Over time, you can proactively reward with options or pay. I always like to be ahead of giving to people who are performing and supporting me/my company before they ask. So get the data and then have a plan to get ahead of it