We constantly hear there are more seed and early stage funds now than ever before and more angels willing to give money to young companies looking to make it big.
Until recently this explosion in the early stage funding environment really was a concern.
Still, some firms, and their partners, are managing to do it well. And Satya Patel at Homebrew is a perfect example.
The main cause for my concern when viewing the market was how can early stage VCs stand out in the crowded market of seed funding?
I walked away from our conversation with Satya and wanted to analyze what it was about Satya and Homebrew that allowed them to succeed.
A great VC has an “insatiable desire to learn”, according to Patel, and both partners learn all they can about the startups they invest in.
Further, the two investors have a bottom up thesis on the market.
“Technology is a great democratizer,” says Patel. “It’s impacting individuals, groups and industries now in a way that it hasn’t historically, because it’s gotten more flexible, more accessible, less expensive.”
Since the firm’s first investment in Clementine — a joint effort between Patel and Hunter Walk — which was sold in 2015 to Dropbox — the firm has a continuously changing set of criteria but strong beliefs in their core thesis.
“We have strong beliefs, weakly held,” Patel continues. “we’ve got principles… that are kind of immutable, that we stick by in terms of our investing. But in terms of what the criteria that we think about — those are always changing and morphing, and hopefully improving.”
For startups, the key to raising funds from Homebrew (or more broadly) is to establish emotional resonance with potential investors. Patel outlines two types of emotional resonance. It’s either the personal story of the founder — and the connection they make with the investor. Or is it the mission itself for the company.
“The founder and the mission are the two things that can establish emotional resonance early on,” Patel advises.
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