The bar for being a successful VC just keeps getting higher. With more and more capital sloshing around and not enough founders and startups to invest in, founders are getting the opportunity to be choosier and choosier about who they want to work with on their cap tables. You can’t just bring a checkbook anymore — founders want operational experience and deep domain expertise in critical areas like growth marketing or recruiting.
That’s led to the creation of more service-led VC models like Sweat Equity Ventures, which “earn” their cap table stake through engineering work for startups among other services (while also offering capital). As these operational VC firms and angel investors proliferate though, how do you find the right ones for your startup?
What you need is a Conduit to great investors, and that’s precisely what Edward Lando and Sree Kolli and their team have been building.
Lando and Kolli have been angel investing from New York City together for a number of years, but increasingly felt that they needed a scalable way to connect their startups to quality operational VCs. Starting from their own networks and expanding organically, they slowly built up Conduit in private beta since January, officially launching to the public today.
So what exactly is Conduit? It’s essentially a matchmaking service for founders and investors. Founders looking for investors set up free profiles of their startups on the platform and then can search for investors based on criteria like investment sector (like “Finance” or “E-commerce”), expertise areas (“Business Development” or “Operations”) and in which rounds an investor typically participates. Founders also can include a short video to give their profile more personality.
On the reverse side, investors can set up profiles giving their specializations and investment areas of interest, and then they can browse available startups and click to get introduced.
There are a couple of interesting mechanics here. Whereas the profiles are free for startups, investors either get a limited set of introductions or have to pay a subscription fee to get more introductions to founders. So Conduit’s revenue model relies on the (hopefully more) flush investor side of the marketplace. Right now, there is only one tier of subscription, although the team is thinking about a “super special tier” that might include early access to some startup fundraises.
Second, many of the elements of the marketplace are curated by the Conduit team. Both investors and startups applying for access to the platform go through an application process and are vetted by the Conduit team. On top of that, the team works to optimize introductions — hopefully to increase the rate of success and the quality of matches. Lando described this as a “white-glove approach” that has been helpful to both founders and investors in their initial testing.
Lando described “the jackpot scenario” as “a startup, you get someone who is super knowledgeable about a problem you’re facing to also just wire you money — so they pay you to also just help you.”
Right now, Conduit only helps connect founders and investors together — the platform doesn’t actually facilitate or broker the underlying startup investment.
In addition to the marketplace, Conduit hosts “office hours” with prominent founders like Jennifer Fleiss of Rent the Runway to discuss specific operational challenges and also has compiled a number of market maps and other operational guidebooks for founders to take advantage of.
Lando and Kolli share an ambition of making it easier for founders to secure funding and get back to building. Kolli said, “I think Conduit is uniquely positioned to not only democratize on the founder side but also on the capital front,” pointing out that family offices in particular have been receptive to getting easier access to startups. For his part, Lando emphasized that he believes much of the world’s capital is effectively wasted on “real estate stuff, or bonds or ETFs or what not,” and that even fractionally moving more of that capital to venture could dramatically improve the world and the pace of innovation.
Ultimately, Conduit has a bit of the feel of AngelList — but without the crowds. Whether it can scale carefully to maintain quality on both the startup and investor side without diluting that high value will be the company’s biggest challenge going forward. For startups today, assuming you get through the velvet rope line, an investment may well be a click away.