Jan. 18, 2021

Finding the right investors at the right stages, by Andrew Gluck.

Finding the right investors at the right stages, by Andrew Gluck.

Andrew Gluck, General Partner at irrvrntVC talks about how startup founders should choose investors for every stage of fundraising that they go through. We also talked about what qualities should founders look for in VCs and why is it important.


irrvrntVC: https://www.irrvrnt.com/

Andrew's LinkedIn: https://www.linkedin.com/in/azg/

Crunchbase: https://www.crunchbase.com/home

Transcript

And today's a guest speaker, we have Andrew glove general partner at irreverent B. C and base episode. We'll talk about the experience and qualities that start founder should look for in venture capital.

So, Andrew, let's kick it off by you giving us some background on yourself and on irreverent. Vc. Yeah, awesome, thank you so much for having me on. I appreciate it.

So, yes, so my background is really heavy digital marketing. I, I spent about a decade in digital marketing, um, actually, almost almost coming up on.

By decade, work anniversary, so so really getting there, but.

Uh, I worked at a VP shop, um, small beauty shop.

I work at a company called Quincy, which is a startup that Amazon has purchased diapers dot com was 1 of their sites. So, dot com dot com. I worked at the vitamin shop, which was a publicly traded company.

And then, um, I Co, founded a digital marketing agency called agency within the agency is now called just a, just within.

And grew it with my partner Co, founder to be 1 of the largest, if not probably the largest independent digital agency in the us really focused on performance marketing. So started it and telling the 2014 beginning of 2015.

While Facebook was really ramping up and Facebook advertising was starting to take a whole view to see was this new big, exciting, shiny thing and, you know, Facebook was.

The new place to advertise and grow those brands. So we're fortunate started a great time.

Great space in New York also, which was heavily focused on worked with a lot of TDC brands brands that you might familiar with like, and and deer and Lola coffee.

Um, other VC back startups like Zola.

And a bunch of others, and then also worked with a lot of enterprise brands like Nike into it so really focused on performance marketing growing these brands growing profitably.

And then, in 2018 added successful exit from the agency and was looking to do something kind of similar leverage.

My analytics goes leverage the, you know, do some of the stuff that I loved about the agency was

working with early stage companies working with founding teams on.

Uh, on kind of the go to market on the 0T to 1, and so started doing some early stage investing, advising, uh, through irreverent VC. Uh, which is, you know, my.

My direct, uh, capital investing in in startups, and then been doing that for about 2 years made 18 of direct investments 5 or 6 advisory.

Roles and, uh, about 6 syndicate investments through through AngelList and really focus on kind of 3 core areas places where I feel I have a unique advantage.

A direct consumer, so that to see background, um, ad tech. So, people who are.

Finding new ways, or new places to advertise, or better ways to advertise and then the 3rd 1 is next gen, commerce. So people are trying to change the way we shop online or offline and yeah.

Been doing it for about 2 years now and loving it. So far, I'm really excited to see kind of what, what happens in the space in 2021. nice. You do have a reach background and that's going to be my 1st question about your background.

So you've found multiple companies yourself and the question is, do you think geared venture capitalists or any kind of investor in startup fields should have that kind of experience in his, or her background.

Yeah, I think I think a few things here, um.
I think it's,
it's definitely helpful on my end,
in terms of having empathy for founders to kind of have gone through the up and downs of, of being a founder of hiring employees,

firing employees of landing big clients of losing clients of understanding that background.

I don't think it's necessary, by any means some of the best investors in the world have no operating experience. Um, so I think it, it really depends, you know, what you feel you need, or what you feel you could use help with.

I think there's a decent amount of data that says it doesn't really matter. Um, and. I also think, um, that.

1 of my biggest things is, is that you need to be the best version of yourself. Right? So, for me, that's really focusing on areas where I think I have a unique advantage and being.

You know, being a, uh, a value, add investor and focusing on the places where I think I can add value. But I think that there's a lot of investors who are.

Phenomenal investors who could help in a lot of other ways to understand how investors think who understand a lot more about, you know, what metrics you need to hit to get from Series A, to Series B or to all the way to.

And, and, you know, kind of building and finding the right the right investors at the different stages is important. And then.

And then also.

You know, working with people who who believe in you and who you believe in is, is critical.

Right I think that this phrase I like finding the right investors at the right stages.

Critical at, but very accurate. And every single stage is very, very unique. So that's a really good answer. So, let's talk about your own fundraising and again back to your experience.

So, you start multiple companies, but I believe on our preinterview call, he actually mentioned that we have not raised any money for those companies. Can you, can you tell us a little bit more about that?

Yeah, sure. So I, um, I, I started, um.

The agency, the agency was basically profitable day 1. we had we had clients, we didn't really have much much in the way of costs, uh, computers.

Uh, me and my Co founder, you know, salaries, which were just taking out of the, any money that was left over at the end of the month. And so, you know.

Don't have that direct experience of fund raising haven't raised outside capital. We also started around same time. We started a.

A start up that was going to put tablets on tables and. Restaurants and clubs and bars, um.

But, you know, that never really got very far. We only put in just a little bit of our own capital and so we never got the stage of really even going out and raising money. And so I don't have the direct experience.

Myself. I've helped companies and built been involved and probably out 30, 40 different fundraising. So far I've seen a lot and have experience, but don't have that direct experience. Myself.

Got it so, let's talk a little bit more about what you're investing now. So you mentioned that you're investing 3 major fields, which is D. C ad tech and future of E commerce. 1st question is why you pick those 3.

Yeah, so really want to focus on areas that I thought an unfair advantage and, you know.

Founders are the ones that are going out and kind of creating creating the future and building the future and.

I don't, you know, I, I.

Don't think that I know what the next right thing to do. It is more than the founders. They're the ones living and breathing the business every single day who had the insights?

I do think that, you know, my experience can add value in terms of having seen other things. Haven't seen later. Stage. Things haven't seen the growth of companies I've been.

And then the companies that I also just consulted with on the agency side, work with a lot of companies that received all the way to.

Series de series, you know, even public companies obviously. So. You know, to find the unique advantage in a little bit.

Of the alpha that I'm trying to find is really based on my experience.

What do I see what have I seen and I've seen 60, 70 different companies and learn and certain patterns of success that I've seen and want to.

Want to kind of see in those early early stages and see the groundwork and the framework for them. That could potentially be huge.

For example, 1 of my big things in is is.
It's kind of either.
The aob is high enough in the 1st order. So, Kara is a company I invested in and they. You know, they sell pot sets for 400 dollars.

You can guess that their margin, you know, the goal is make money on the 1st order, but have there's LTV. Sure. People could come back and reorder an order. I've ordered 2 sets of pots are adding. My wife really liked in order to set as a gift.

So, my LTV is really high, but you want to.

Have enough, you know, not just not just margin percentage, but contribution margin dollars on that 1st order in order to be able to go out and spend money on advertising.

I spoke to a beauty startup today was 80 or 90% margins, but the is going to be 20 bucks right? So they could spend.

You know, they could spend 20 dollars times 90%. They could spend 18 dollars to acquire customer.

The caraway, even if I'm just gonna make up a number, even at 50% margins, they could spend 200 dollars to acquire customer and be profitable. So, like, think about those different aspects and how they play with each other sure.

Lower margin products going to have a lower it will be products and have a higher conversion rate, but you have to you kind of have to understand that.

It's that's 1 way of success. The other way of success I've seen ndtc is subscription where subscription makes sense. So.

A lot of subscription originally started ironically places where it probably didn't make a lot of sense in places where people didn't want.

Something that our house every single month to every single quarter, but, you know, having seen. You know, kind of the success of subscription companies.

Where it does make sense where it's consumable good you use it at a regular pattern and once you use it, you don't really stop using it. So, invested in and advise companies in.

Mentored our space from recall true zones.

Once you find the color and a, and a hair dye you like, if you die or you like it, you continue using it. They're they have they have.

Tremendously great retention offers cheeky direct to consumer night car company. It's a personalized

night guard. So big deal for me is personalization. I think there's a lot of opportunities. Um, there as well, you see it with, uh, you know.

And invest in them I didn't and frankly, I didn't even see them when they were raising. I wasn't in the loop enough, but like, Sunday, the lawn care business, right?

It's personalized your zip code. It comes to your house you got it at the beginning of the season. Like, their retentions probably astronomical because it's like, once you order.

You wanted to come again the next season and those business just make sense, because you can go out and you can acquire customers.

At a clip at a fast enough growth rate that makes sense. And you. Can make money on that in the 1st, 6 months or 12 months.

You know, when I look at places, I want to invest, it's places where I have insights like that from my time. You know, that's not.

Earth shattering, I'm sharing it here. It's not a secret. These aren't secret things, but these are kind of the things that I've learned to picked up along the ways where I think I have those unique insights from 10 years in the business and understanding.

That other people might not have, right? Yeah, that does make a lot of sense. And here, let's actually talk a little more about actually invest in companies. So, 1 question that just popped into my head is reversed patients.

So, you know, when founders speech to you, then layer on, you actually have to pitch your own fund to them and make sure that it's in their best interest for you to invest in them. So, how much how frequently do you get requested?

Like, could you tell us more about your font and hearing those questions? Or do you think the founder should actually make their own research on your fund before having a call with, you?

No, I love that question. It shows that the founders are are coming and I would understand a lot of times, you know, by the time we get to on a phone call with exchange an email or 2, and.

In the middle of redesigning my website to get more information on there. I also think like.

Um, 1 thing I've seen more and more people do, which, which I definitely want to emulate next year is, like, uh, you know, send out something brief before before the call, not even a 1 page or just like, here's a little overview of the file.

And now we operate how we invest cheque sizes, but like.

I think it's critical for founders to do that, and they should do that on the, on the initial intro call, make sure that.

You know, that the founder that the investor that you're talking to as the ability to make a decision, um, or, you know, bring it to the, you know, bring it to the investment committee in the right way and that you're kind of in the, you know, you're not.

Wasting your time I think it's, uh.

Important to set expectations for everyone kind of, from the get go in terms of what everyone kind of wants to get out of the relationship and what's important to them. And I think.

You know, there's a investors do themselves a disservice by not saying no, by not explaining why and, like, I've tried to get better at this over time and be more open about it and.

If I get to the point, you know, where, where I got a call with someone, like, I feel like, I owe them a.

Hey, if I'm passing or, you know, a reason and understanding of why I'm passing and why it's not a good investment for me. In my opinion.

Um, doesn't mean, I caveat that with heavily with.

You know, take this with a grain of salt or not, you know, the expert in field often. That's the reason I'm passing is, you know.

Is a, I don't even, you know.

Maybe not getting on calls with people, but sometimes I get emails. I'm like, I don't even know the right question to ask. And this is an area I invested in, like.

Here's the 2 or 3 things I would change in the deck that would make it more exciting. But, like, it's not a fit for me. Like, tried to do things like that to be to be helpful in the environment.

Right so let's talk about the normal patient now. So when the failure actually tries to teach the company to you as to investor, or what do you think is the major mistake that they're making.

Um.

Or, like the most standard 1 yeah, I think I think 1 is 1. 1 is fit, right? Like like you asked about, like, you know, who who are you pitching? And, like.

The best fundraisers I've seen are when you run a type process and you're talking and got in your deck in front of.

50 people who are the right people to see the deck. Right? And what that means is.

These are people who invest in this round in this category in this geo, and are excited about this space.

So, you know, when you get a, you know.
Our tech pitch in front of me, it's, you know, I don't even count that as part of your, you know.

7100 knows that you need to see before getting to a yes or, you know, on the road to 5. yes. Is to fill out around because it's like it's so not a fit for me that like, it, it's not.

It's like, it didn't you didn't I didn't even evaluate it. Really right? And I don't blame people for sending it to me and I'll always look at things and so, um.

I'll look at a deck I get it doesn't mean that I'm really about for for invest mid worthiness but I think that's the number 1 thing is people just just.

The finding the right investors get in front of and there's a lot of research. You can do an actual work you can do. It's not just.

You know, batch and blast or spread, pray and going through crunch base and looking at. You know, people in your in your space, right? So, like.

You don't want to in our pitch someone who's a director who invested in a direct competitor, but. People are investing in health and wellness. People are investing in.
Tell him, and I said people are investing in a church and people are investing in.
Fintech and in the right kind of spaces. Right? And and that's, you know, that's.

I think like 50% of the time, you know, the, you know, why something's not finished. You're not you're talking to an investor who, even if you had the best pitch ever, is never going to invest glue because it's not a space. They know.

Well, enough to even realize how good your pitches.

Right. That's a very accurate. So, speaking of making research, how can a founder was the best way for founders to get in touch with investors like yourself or on your example, was the best way to get in touch with you as a founder.

Yeah, I mean, I'm, I'm very open and I'm active on Twitter. My dm's are open. I read every single cold email. I get a cold LinkedIn message. I get, um.

You know, I'm very accessible. I get a lot of inbound and then some other people, you know, being new to the industry and everything else, but a lot of people are.

Are open, I think if I say it this way our raising around now, I would spend.
You know, time getting the deck ready, getting it. Correct.
And then take 2 different approaches, maybe 1, which is, hey, let's try and get this in front of.
50 to 50 to 100.
Investors who invest in the space and in this stage, let's either try to reach out through, you know. Through email, or Twitter, or, you know, through their online form or whatever is, um.
And get in touch with those are the same time.

Do the batch to to email list that you have access to, or or people that, you know, or people that are your network even if they're not a fit and you can even address that and say, hey, we're, we're raising right now.

We're trying to get this in for the right people not sure if you're the right if this is going to be a fit for you, maybe, you know, people in fintech or the best is when you're like, hey, like, I see you're connected to X. Y, Z you think you could forward this deck to them because.

You know, decks are the chair index is the currency of the of the industry so no, 1.

I've never sent the deck to someone and then the me, and, like, I can't believe you sent me this deck. It's, you know, people are always grateful to get more deal flow. So, uh, you know, that that's kind of the strategy approach I would take is is kind of that 2 pronged approach.

Right and I think that's the right way to reach out to investors as well. That's very true. So, I like to end the episodes on the good note on something positive. So.

You're pretty new to the field so maybe you don't have any of those crazy ideas you've heard, but maybe you do. So question is what is the craziest idea you've ever heard as an investor?

It's a good 1. I don't know if it's crazy. I like it. It wasn't a fit for me. I mean, they're, they're doing well, but 1, that I think is just really cool. Is a company called a.

At, I'm not going to pronounce correctly, but either dawn is E. T. H. R diamonds. And what they do is they actually take.

They take they take carbon out of the out of the air and they're actually carbon negative diamonds and the love the idea of, you know.

Of the social good of taking.

I just think it's a really interesting kind of niche to be in. Right? There's, I've grown diamonds are taken off.

People are really, you know, anti conflict, diamonds and and things like that and taking something that's, you know, even lab grown, which is.

Carbon neutral and and conflict free, but moving to it to be carbon negative where, after something carbon out of the air is is pretty cool.

Right that's true. And yeah, on that positive notes, we're moving on to the last question. If these app is a way, she's a call to action. So, Andrew, what is the 1 specific thing you want to Elise here to do? As soon as the episode is over.

Um, it's.
Research and find the right funds to reach out to. I think CrunchBase Pro is probably like.

You know, 20 bucks a month or something like that. It's well, worth the investment for a startup. If you're raising capital.

Go and do your research find the, you know, the 20 companies, the 10 companies this year that raise capital that are in your real house?

The, the 1010 the past 10, you know.
Past few years, because you could look at previous rounds also on current space and reach out and.

Start to create that list and that list should be somewhere between 50 and 100 funds. 1500 people that you want to connect to.

And then, and then, do your work to find a way to connect. Listen, I'm very open to cold outreach. A lot of great investors are some, aren't some, you know, they.

Get a ton of a ton of, you know.

Inbound, and they can't, they don't have the time for the bandwidth and they only really deal with warm intros seeing if you could figure out, which are which, but if you can't, you know, try to find intros to whoever you can.

Um, and yeah, start start, start working and kind of developing and and. Do that process correctly and it will make your.

Rays go much more smoothly, much more quickly and much more efficiently. Like.
Plan the work and then work the plan. That's very accurate and yes. Crunchbase Pro is great and yes. In referral fees.
It's a CrunchBase Pro, send me those referral fees.

I should talk to them. Yeah, I think I mentioned CrunchBase pros like, I know 20 times on this podcast already. So yeah. Should definitely get that. Preferably. But, yeah, we don't have referral fees. So if you click the link in the description of this episode.

I will not get a dime, so I know if that makes you happier, but it's going to be there for your own. Good. I'll leave a link to andrew's LinkedIn as well and to the irreverent VC official website as well.

So, there is going to be 3 links and the description of this episode, my call to action is going to be please feel free to use all 3 of those links and as usually have a good.