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6 VCs share advice for laid-off tech workers planning to launch startups

Walter Thompson @yourprotagonist / 1 year

Many tech workers have never experienced a job market like this one.

Last year, 1,044 tech companies let go of 159,786 employees, according to Layoffs.fyi. As of this writing, 103,767 workers have been laid off from 345 startups so far in 2023. Many, many more are coming, obviously.

Losing a job unexpectedly is more than a financial shock. Many of us invest much of our identity in what we do for a living, which means layoffs can transform social and emotional lives overnight.

Slashing your personal spending and polishing your LinkedIn profile is the right move, but investors tell me that now is still a good time to launch a startup. The fact that you’ve just been laid off from a startup proves that you have a tolerance for risk. How much are you willing to bet on yourself?

Depending on where you worked and what you did, you may already have the experience investors are looking for when it comes to reaching product-market fit and solving engineering problems. Mentors are immensely helpful, but they’re not a requirement: We run articles regularly that explain how to create pitch decks and reach out to investors.

I surveyed six seed- and early-stage investors to get their tactical advice for laid-off tech workers who are thinking about starting up. Most of them are so open to pitches they’ve provided their contact information below.

Each shared details about the sort of deals they’re looking for right now and indicated how they prefer to be approached with pitches.

“If you want to have a compelling story, go deep into an area you’re excited about and are uniquely suited to tackle,” says Rex Salisbury, partner at Cambrian Ventures. “The best way to get my attention is to show you’ve done research as to why we might be a good fit to work together.”

And if you’re concerned that your former employer will accuse you of stealing their billion-dollar idea, let that go.

“Before meeting with anyone, it is smart to research things they have previously written, Tweeted and/or spoken about publicly.” Deena Shakir, general partner, Lux Capital

“IP is important to us. However, some founders let their preconceptions of IP concerns hold them back from starting a company,” said Dr. Galym Imanbayev, partner, Lightspeed Venture Partners. “Fear shouldn’t drive that decision; seeking appropriate counsel and doing a robust IP review should.”

Reaching out to an investor isn’t just about getting their money; it’s also a way to make connections and demonstrate the value you bring to the table. You never know, the VC who passes on your pitch may recommend you to a founder that’s building a team.

“What also stands out to me are founders who are genuine in building and maintaining relationships whether or not a transaction materializes,” said Christine Tsai, CEO and co-founding member of 500 Global. “This is often a good indicator that a founder thinks long term and values trust.”

I spoke with:

Rex Salisbury, founder and general partner, Cambrian Ventures

Do you have any IP concerns about investing in someone who developed an idea while working for their previous company?

No. One of the amazing things about the Bay Area is the general acceptance that people start new companies when they leave old ones. Overzealous defense of IP is a net negative for everyone.

Many investors say now is a great time to start a company, but thousands of workers have been laid off in recent weeks, and more RIFs are expected. There are probably hundreds of newly unemployed people who want to start a company. How can someone without a network stand out from the crowd?

Most laid-off workers are understandably nervous and worried about their future, but they should be motivated by the fact that VCs are looking to make investments, regardless of the economic situation. If you want to have a compelling story, go deep into an area you’re excited about and are uniquely suited to tackle.

The best way to get my attention is to show you’ve done research as to why we might be a good fit to work together. There are a lot of inbound requests for funding, but the ones that stand out are thoughtful and tie in with my approach. There’s a lot of value in taking the time to do research and find the top three investors instead of sending out a mass email blast.

What kind of opportunities are you looking for in Q1 2023?

Founders who teach me something new that relates to an exciting opportunity in the financial services ecosystem that they are uniquely qualified to tackle.

Tell us how you’d like to be approached by a founder with their initial pitch.

Cold emails with a deck, blurb and your LinkedIn profile are welcome. You can probably guess what my email is!

What are a few books, articles or podcasts a newbie should explore before they try to meet with you?

Here are some of my favorite things to read and listen to, but [they] are no means required before meeting with me:

  • Capital Isn’t: What’s working in capitalism and what isn’t by University of Chicago.
  • Fintech Law TLDR: It turns out that understanding the regulatory landscape in fintech matters.
  • Fintech Takes: Bi-weekly newsletter by Alex Johnson, a former credit expert who quit his job to document the future of fintech.
  • Money Stuff: Ex-Goldman derivatives structure with a cult following (iykyk).

Christine Tsai, CEO and founding partner, 500 Global

How can someone without a network stand out from the crowd?

We seek founders who are truly passionate and empathetic about the problem they’re solving and the customers they’re serving. Building a company is incredibly difficult and will push you to your limits mentally, emotionally and physically. Having the commitment to show up every single day and keep moving is critical.

What also stands out to me are founders who are genuine in building and maintaining relationships whether or not a transaction materializes. This is often a good indicator that a founder thinks long term and values trust.

What kind of opportunities are you looking for in Q1 2023?

Our portfolio is quite diversified and spans a number of sectors, stages and geographies. We’re actively looking at opportunities in fintech, B2B SaaS and infrastructure tools, health digitalization, commerce, AI and sustainable tech.

As for geographies, we’re continuing to invest in Silicon Valley/U.S. and around the world, particularly in regions like Southeast Asia, Latin America, Middle East and Africa where we’ve been investing in for many years.

Tell us how you’d like to be approached by a founder with their initial pitch.

Because we know firsthand that talented founders exist in all corners of the world, we rely on our network of founders, mentors and partners, which spans more than 80 countries. Warm referrals from our network are great, and we also review inbound applications from our website.

What are a few books, articles or podcasts that a newbie should explore before they try to meet with you?

Lately, I’ve been reading books from Asian-American authors, both fiction and non-fiction. As a child, I always excelled at writing and dreamed of publishing a book one day. Seeing more and more people that look like me authoring books and being represented in media and business is inspiring. Hopefully one day, I’ll get around to accomplishing that childhood dream.

Anna Barber, partner, M13

There are probably hundreds of newly unemployed people who want to start a company. How can someone without a network stand out from the crowd?

For new entrepreneurs, showing they know and understand their prospective customers is much more important than having a big Rolodex. The best products emerge from ideas that you only get from talking with tens or hundreds of your customers.

Another great early sign is entrepreneurs who can get others excited to build with them. I’m always looking for that founder who builds through “attraction, not promotion.” These founders don’t promote themselves. Rather, they talk about the problem they want to solve and ways to solve it, which motivates advisers, partners and employees to contribute ideas.

Do you have any IP concerns about investing in someone who developed an idea while working for their previous company?

It depends how close their idea is to the business they just left. Most founders choose to build in a different space entirely or an adjacent category, so this isn’t an issue that comes up very often.

With most software startups, execution matters much more than the original idea, so we don’t see a lot of disputes about IP.

What kind of opportunities are you looking for in Q1 2023?

I’m focused on the future of work and e-commerce infrastructure. I invest frequently in marketplaces across these categories and am also interested in productivity tools, circular commerce, the care economy and climate. We are principally a Series A fund and I’m focused on core Series A investing, but I always like to get to know founders early.

Tell us how you’d like to be approached by a founder with their initial pitch.

I’m pretty easy to get in touch with. Twitter DM or a good cold email is fine!

I want to see a deck, a short summary of the business and the round you are looking for, and some quick thoughts about why M13 is a fit. I try to respond to everything, except form emails or outreach where the founder clearly hasn’t done any homework on us.

What are a few books, articles or podcasts that a newbie should get into before they begin working on their pitch deck?

I’m a fan of founders who learn by doing [rather] than aspiring founders who read every book and spend time on Twitter. Go talk to customers and get out of the tech and VC echo chamber!

For a good flavor of the startup life and a variety of perspectives, I like the podcast How I Built This. And there’s a great book about entrepreneurial resilience called Startups and Downs by Mona Bijoor that I also recommend. It is a great time to start something new. Good luck out there!

Dr. Galym Imanbayev, partner, Lightspeed Venture Partners

How can someone without a network stand out from the crowd?

Leverage what already makes you stand out from the crowd.

Within an organization, you may be one of a dozen folks who know and do one function very well. Within that group, it’s hard to stand out. When you leave, this past experience positions you above 99% of other people, including investors, in knowing what’s really going on. So I encourage founders to dig into existing strengths and lead with domain expertise.

Instead of sending a CV around, which forces you to shrink your corpus of knowledge and experience into a few bullet points, expand and share how those insights position you to understand and solve a problem better than anyone else in the world. Ideate and invite investors to think through problems together.

You’d be surprised how many investors don’t want to only evaluate deals and are willing to sit down and think through markets and problems.

Do you have any IP concerns about investing in someone who developed an idea while working for their previous company?

IP is important to us. However, some founders let their preconceptions of IP concerns hold them back from starting a company. Fear shouldn’t drive that decision; seeking appropriate counsel and doing a robust IP review should.

What kind of opportunities are you looking for in Q1 2023?

I’m looking for strong founders innovating in areas that are acyclical. Healthcare happens to have a number of sectors where the demand is so high and opportunity for improvement so large that they don’t get as affected by the macro environment as other sectors.

I’m interested in technologies enabling care at home, startups streamlining medical labor, improved payor and provider payment infrastructure and software to improve preclinical and clinical R&D.

Tell us how you’d like to be approached by a founder with their initial pitch.

In this day and age, with tools like LinkedIn, you should put in the work to try to get an introduction. It’s not for gatekeeping’s sake: the process itself will expand your network, and if you’re listening, give you opportunities to learn.

I still do read and take meetings from cold emails, but frankly, the bar is high for those. Founders need to demonstrate that they’ve put in some effort to understand who I am and what I invest in.

What are a few books, articles or podcasts a newbie should explore before they try to meet with you?

As a healthcare guy, a podcast I enjoy is A Healthy Dose. It gives you a sense of the patience, dedication and impact founders in healthcare embody on their journeys. A book that I think can be helpful is Thinking, Fast and Slow by Daniel Kahneman. The book is about the fallacies of the human mind and being aware of your biases.

If you’re aware of your own heuristics, you can be more aware of how other people think. This awareness can help you pitch to investors more intentionally, and mastering how you think can also benefit your entrepreneurial journey.

Deena Shakir, general partner, Lux Capital

Do you have any IP concerns about investing in someone who developed an idea while working for their previous company?

Potentially! It depends on many factors.

How can someone without a network stand out from the crowd?

Leveraging social media can make a significant impact, and you don’t need an existing following to stand out. In fact, I’ve seen a handful of LinkedIn posts about layoffs go viral from folks who had limited followings beforehand.

Reaching out to investors is another effective way to scalably get in front of high-quality startups, because VCs can share your CV/profile with their broader portfolio.

What kind of opportunities are you looking for in Q1 2023?

Exceptional ones! I’m excited about continuing to back relentless, mission-driven entrepreneurs that are advancing the future of human health.

Tell us how you’d like to be approached by a founder with their initial pitch?

My DMs are open on Twitter, but I’ve been approached in all sorts of ways by founders.

What are a few books, articles or podcasts that a newbie should explore before they try to meet with you?

Before meeting with anyone, it is smart to research things they have previously written, Tweeted and/or spoken about publicly.

For example, I’ve probably done a dozen or so podcasts about my personal journey to VC, so it’s a better use of time to do your research and come into the meeting with targeted questions to stimulate a more intimate conversation.

Stephanie Palmeri, partner, NextView Ventures

Do you have any IP concerns about investing in someone who developed an idea while working for their previous company?

Generally not, as long as the idea was not developed using proprietary information or resources from the previous company. This is something that can be addressed on a case-by-case basis as appropriate during the diligence process.

How can someone without a network stand out from the crowd?

Never underestimate the importance of founder-market fit. A founder can stand out by demonstrating deep expertise or unique empathy — through personal or professional experience — for the problem they are looking to solve.

What kind of opportunities are you looking for in Q1 2023?

I’m looking to meet pre-seed and seed-stage founders building for the everyday economy: both consumer and B2B applications and enabling technologies that address broken end-user experiences and improve our everyday lives, work, health and financial well-being.

Tell us how you’d like to be approached by a founder with their initial pitch.

While a warm intro from a mutual connection is a great way to stand out in a crowded inbox, a cold, but well-crafted personal note that highlights the mutual fit between our investment focus and your startup can certainly make an impact.

We also have open applications for our fourth annual NextView Ventures accelerator program, which has been a great way for us to connect with amazing founders from across North America who might otherwise be entirely off our radars.

What are a few books, articles or podcasts a newbie should explore before they try to meet with you?

We get pitched all the time as investors, so we put together a pitch deck of our own for founders to get to know us. It’s on our website.