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How to pitch me: 10 investors discuss what they’re looking for in June 2023

Walter Thompson @yourprotagonist / 11 months

Let’s explode a few myths.

For starters: The tech industry is not a meritocracy. There’s a direct correlation between the size and strength of your network and your chances of success.

Second: It’s relatively easy to connect with reputable investors. Most firms’ websites have email addresses and contact forms.

There are many reasons why startups fail to get off the ground, but it generally boils down to three things:

  1. You don’t have a billion-dollar idea.
  2. You’re pitching the wrong investor.
  3. They’re not sure if you can execute against the plan.

This month, all 10 “How to pitch me” participants shared their investment thesis, along with tactical advice for nontechnical founders and the questions they expect entrepreneurs to ask them during pitch meetings.

Consider yourself on notice: With deal flow down across the board, “applying fake time pressure to get a VC to make a quick decision” no longer works, said Blair Garrou of Mercury Fund.

“Artificially engineered FOMO is out,” said Monique Woodard, managing director of Cake Ventures. “Showing momentum is great, but I guard against being overly influenced by short timelines and the participation of other investors.”

Respondents also ballparked salaries for pre-revenue startups, discussed the pros and cons of using pitch memos vs. full decks, and all shared what they’re reading, watching and listening to. (This group loved “Succession” so much, they would probably take a pitch meeting with Kendall Roy.)

Thanks very much to everyone who took the time to respond! If you’re an early-stage investor who’d like to be included in future columns, email guestcolumns@techcrunch.com with “How to pitch me” in the subject line.

These responses have been edited for length and clarity. Here’s who participated this month:

Vivek Ramaswami, partner, Madrona

What kinds of investment opportunities are you looking for in June 2023?
At Madrona, we invest from pre-seed to growth. Personally, I am excited about investing in Series A, B and C startups across B2B software, cloud infrastructure and AI/ML. Of course there is plenty of excitement in generative AI today, and we’ve made several investments in this space, but I believe there will continue to be great opportunities across the software stack that are either natively built on, or finding ways to leverage foundation models.

How do you prefer to be approached: a cold email, a warm intro or another method?
I’m always open to a cold email in the sector and geographic domains I focus in. A warm intro always helps, but I understand that not all founders will have an opportunity to get a warm intro. My email is vivek@madrona.com.

Many laid-off engineers are launching their own startups: What are some of the skills/experience you look for in nontechnical founders?
There is no reason why nontechnical founders can’t be successful in starting their own companies.

For nontechnical founders, I get excited about how they can lean into their strengths: (1) deep domain expertise in the sectors they are starting a company (something we often see in vertical SaaS companies where founders have “lived the problem; (2) an ability to recruit and hire amazing talent around them; and (3) a keen sense of customer focus, understanding of market dynamics and business model planning that is important and often the strength of nontechnical founders.

Generally speaking, how much salary should the founder of a pre-revenue startup pay themselves?
The range can be wide, as each case can be quite different (e.g., a second-time founder who raises again may be more comfortable with very little cash comp and more equity than a first-time founder, etc.). On average, when we look at the data we have, I would consider $130,000-$150,000 as a reasonable salary range for founders who have raised <$25 million and live in a “Tier 1” city.

In June 2023, what are some of the top questions founders should be asking investors?
Founders should be asking investors what specific sectors and stages they are investing in, because while funding was flowing freely in past years, it is less so today, and many investors are retrenching into the areas they know best. Additionally, founders should be looking at the track record of the firm, have they been able to successfully raise funds and do they reserve funds for follow-on rounds after the initial funding round.

This is very important in the current environment. And of course, take a look at the talent, marketing and biz dev help that an investor’s firm and personal network can bring to bear for your company.

Founders should also ask for references — what companies has that fund worked with, especially the partner leading the deal, so they can get a fuller sense of what the journey will be like with that fund and partner. This is a long-term relationship, so doing as much work upfront matters!

Are you open to reviewing pitch memos, or do you prefer a completed deck?
A pitch tactic I see that almost never works is having a banker cold email about a company that is completely irrelevant to the stage and sector that I look at. If anything, I would prefer the founder to reach out themselves and that way I can at least learn a bit more about the founder and it comes from a more authentic and genuine place.

It surprises me how many cold banker pitches me and my colleagues receive! A memo is fine as long as it is coherent, provides the necessary info and is concise.

Tell us about the best pitch you’ve received recently: At what point in their presentation did you realize you were going to invest?
I can’t name the company, but it was a growth-stage startup that started the presentation with the cold hard facts on the business: what scale they were at, how fast they were growing, their win rates against competitors and forward forecasts. They followed that up with what has both been going right and wrong in the business, but ultimately why they believe they are creating a generational business in a massive market, and why THEY were the right people to found the company.

Within the first 10 minutes they had laid out: (1) how well the company was doing; (2) how big the market opportunity was; and (3) why they had an unfair advantage as founders over everyone else. It was incredibly concise, straightforward and compelling to hear.

What are you reading/watching/listening to?

I’m currently reading “Chip War” by Chris Miller, a fantastic account of the development and subsequent battle over the most critical resource today — microchips. It’s an especially helpful lens to view the need for compute infrastructure in building AI companies today. I just finished watching “Succession,” so I need a new show!

Monique Woodard, managing director, Cake Ventures

What kinds of investment opportunities are you looking for in June 2023? 

We are aggressively investing out of Fund I and focus on U.S.-based pre-seed and seed stage companies that fit into one or more layers of the investment thesis at Cake. Cake Ventures has a clear investment thesis: invest in companies with global ambitions who are creating technology products that meet the needs of tomorrow’s internet users. We call this investing in demographic change.

The three key/markets we explore are:

  • The aging population whose size and spending power has created unique needs across categories like care and social isolation, preventative health, late-life financial services and longevity.
  • The increased spending power of women which are companies in technology categories like women’s health, commerce and the many ways women save, spend and invest money.
  • The shift to majority-minority and the changing technology consumption habits and needs that impact social, financial access, health equity and the future of work.

Right now, I’m very interested in companies that touch the future of non-white collar work. A lot of innovation has been focused on the office worker, but I want to see more innovation around healthcare jobs, service workers and other non-office careers.

How do you prefer to be approached: a cold email, a warm intro or another method

I want to hear from any founder building a company that will be accelerated by demographic change. How you reach me is up to you – just be prepared when you reach out to me to tell a concise, compelling story about the business you are building and why it matters. I can be reached on Twitter @moniquewoodard and you can can also reach out on our website.

Many laid-off engineers are launching their own startups: What are some of the skills/experience you look for in nontechnical founders?

I invest in the right person for the job and sometimes that is someone technical and sometimes it is not. The macroeconomic environment is leading many people to start companies who maybe would not have otherwise, and I think this is going to be a great thing. In lieu of technical skills, a great founder might have impressive sales skills — they will just have to know how to partner with a co-founder in order to get the product built.

The main thing I look for in founders is a big idea that can scale into a massive business, the ability to consistently execute and the resilience to get the business there.

In June 2023, what are some of the top questions founders should be asking investors?

I think asking questions around expectations on company growth trajectory, communication cadence and how the investor can best support the company as it scales are really important.

What’s a traditional pitch tactic that no longer works but is still a common practice? Are you open to reviewing pitch memos, or do you prefer a completed deck?

Artificially engineered FOMO is out. Founders who withhold information to be mysterious and put an aggressive time clock on investor decision-making (e.g., “we’re closing in three days”) are usually deals I’m going to pass on and I have never regretted that decision. Showing momentum is great, but I guard against being overly influenced by short timelines and the participation of other investors.

I will absolutely review a memo as long as it provides a full story and gives me an understanding of the business. Sometimes, memos do that better than decks.

Tell us about the best pitch you’ve received recently: At what point in their presentation did you realize you were going to invest?

The pitch I got from Jessica McGlory at Guaranteed was one of the most compelling conversations that I have had about the intersection of care and end of life. She was both mission-driven and dedicated to building a massive business in hospice care and the vision and thoughtfulness she showed in every conversation made me want to be on her team.

What are you reading/watching/listening to?

I’m reading “Palo Alto: A History of California, Capitalism and the World” by Malcom Harris and listening to the new Jelly Roll album, “Whitsitt Chapel.”

Adam Struck, founder and managing partner, Struck Capital

What kinds of investment opportunities are you looking for in June 2023?

We are especially excited about the technical innovation happening across fintech, e-commerce enablement, climate tech, and AI. Additionally, given the different macro environment than during the COVID boom, we have seen that more and more seed-stage companies are approaching funding in a more deliberate fashion.

To us, this means raising more appropriate rounds of funding that enable their companies to find robust product-market fit without exorbitant cash burn. I think this environment is more healthy and ultimately fosters more disciplined and efficient startups.

How do you prefer to be approached: a cold email, a warm intro or another method?

We want to speak to the best and brightest founders, regardless of if the introduction came from someone within our network or from cold outreach. With that being said, a warm introduction can help us cut through some of the noise, as we receive dozens of pitches each day.

If you’re comfortable doing so, please share your contact info. 

info@struckcapital.com.

Many laid-off engineers are launching their own startups: What are some of the skills/experience you look for in nontechnical founders?

We are excited about investing in nontechnical founders with robust information asymmetries that give their business an unfair advantage over the competition. For example, we get excited about a nontechnical founder that might have experienced this pain point in their previous role or sold into a similar buyer persona within their ideal customer profile.

Generally speaking, how much salary should the founder of a pre-revenue startup pay themselves?

Companies like Pave have become a great resource for founders and investors to benchmark salaries based on their role, location and amount of funding raised. It’s difficult to pinpoint an exact salary, as each individual’s financial situation is unique based on the stage of their career they are in, money saved and personal situation. We are in favor of more people pursuing entrepreneurship and becoming founders, so as long as a founder is most concerned with growing their equity value and not their cash composition, generally they can align with their early investors on a reasonable salary.

In June 2023, what are some of the top questions founders should be asking investors?

Founders should definitely look to speak with [other] founders within that VC’s portfolio and ask how the fund supported [them] during times of difficulty and uncertainty for their startup.

What’s a traditional pitch tactic that no longer works but is still a common practice?

We still encounter pitches that revolve around founders preferring to present their entire pitch deck and take questions at the end. We much prefer an engaging back-and-forth discussion around specific questions we are interested in learning more about. A discussion results in much deeper insights from a founder, which can be extremely helpful in deciding if we want to dig into further diligence.

Are you open to reviewing pitch memos, or do you prefer a completed deck?

Typically, we prefer a completed deck, as this lets us be as prepared as possible for an introductory conversation with a founding team.

What are you reading/watching/listening to?

I’m reading any and all articles involving advancing the safety of machine intelligence, the “Succession” [series] finale as a guilty pleasure.

Jenny Lefcourt, general partner, Freestyle Capital

What kinds of investment opportunities are you looking for in June 2023?

We are actively looking for opportunities with a strong founding team where we have conviction that it can be a massive business given the current market as well as the macro trends.

Regarding AI, we are excited about opportunities that will be unlocked in education, health tech and prospecting/sales.

How do you prefer to be approached: a cold email, a warm intro or another method?

Warm intros from founders and our network are our preferred method, but we also appreciate a thoughtful and well-executed cold email (jenny@freestyle.vc or dave@freestyle.vc).

Many laid-off engineers are launching their own startups: What are some of the skills/experience you look for in nontechnical founders?

We love when founders have an “unfair advantage” in some way. This can show up in a variety of ways: a unique perspective they have given prior experience, key connections, ability to recruit the right talent, their passion and vision for the problem they are solving, etc.

We do appreciate founders that are open-minded (good listeners, but develop their own POV), data-driven, have a sense of urgency, persistent, resilient, strong communicators, organized thinkers and fun to work with!  A bonus is a great sense of humor :)

Some of our best-performing portfolio CEOs were not technical, such as Jack Conte (Patreon), Alexi Robichaux (BetterUp), Amit Sharma (Narvar), Aaron King (Snapdocs) and many others.

Generally speaking, how much salary should the founder of a pre-revenue startup pay themselves?

We believe that founders should have a reasonable salary to cover their living expenses but not take too high a salary that could hinder their ability to build a sustainable and valuable business.

A founder’s salary can also impact others on the team, so a founder should keep that in mind when establishing the right number for themselves. It is a powerful negotiating technique to tell a recruit that the CEO doesn’t make more than they will (or even makes less!).

The range we have seen at seed stage is about $80,000-$160,000, but we have also seen a founder/CEO get paid more as the company gets to later-growth stages.

In June 2023, what are some of the top questions founders should be asking investors?

I think founders should always know the answers to the following things:

  • What value can the investor add to your specific business and, equally important, at your specific stage?
  • How does the investor like to communicate and interact with their portfolio companies (e.g., communication style, involvement, decision-making desires and cadence)?
  • How does the investor handle conflict or disagreements? Does their style work with your own?
  • I highly recommend speak[ing] with other founders that have worked with the investor during tough times as well as good times. All VCs look wonderful when things are up and to the right. Seeing how a VC behaves in hard times is critical to understanding whom you may be inviting to your table.
  • What are the investor’s expectations for growth, milestones, outcomes and timing? Being aligned here is key!

What’s a traditional pitch tactic that no longer works but is still a common practice? Are you open to reviewing pitch memos, or do you prefer a completed deck?

A pitch tactic that doesn’t work is the generic and early “things are moving quickly” email. A version of this that does work well is, once you have had a meeting and established chemistry with an investor, is emailing them that “in the spirit of transparency, things are moving more quickly…” assuming that is the case.

I prefer a deck vs. a memo as the storytelling and concise communication that goes into pitch decks really helps investors understand the high-level opportunity. Pitch decks also help founders structure their narrative and visually present their ideas, which makes it easier for investors to understand and engage.

I recommend that founders have an appendix with slides that answer questions they think they may get asked so that the main presentation can be focused on the key points and overarching narrative but that the founder still has the benefit of being prepared to answer specific, tactical questions.

Tell us about the best pitch you’ve received recently: At what point in their presentation did you realize you were going to invest?

I was recently pitched by a founder that I angel invested in 15 years ago and knew that I would likely want to be involved in anything he was building. Not only was the exit of his prior company exceptional, but he was exceptional to work with — smart, hard-working, growth mindset, great communicator, fast and strong executor and an all-around awesome human. So, as soon as I heard what he was building and why (five minutes into the pitch!) I knew I wanted to invest.

One’s track record as an entrepreneur/founder is obviously great as exemplified by the story above … but not needed. If you don’t have a track record as an entrepreneur, be great at sharing your vision and opportunity and why you are well positioned to be successful.

What are you reading/watching/listening to?

I listen to the All-In podcast weekly and love listening to the podcast Invest Like the Best. I read The New York Times, StrictlyVC, TechCrunch and several well-known VC blogs daily. I am currently reading the novel “Tomorrow, and Tomorrow, and Tomorrow” by Gabrielle Zevin.

Champ Suthipongchai, general partner, Creative Ventures

What kinds of investment opportunities are you looking for in June 2023?

At Creative Ventures, we are looking at a subset of nonhype GenAI that leverages reinforcement learning for more niche applications, particularly in the robotics space.

How do you prefer to be approached: a cold email, a warm intro or another method?

We’re pretty agnostic. We have the ability to quickly screen whether a company is a good fit for a deeper probe in a matter of seconds. It’s much more important to us that it’s handled thoughtfully. Be concise and articulate from the get-go by telling us what you do and what problem you’re solving. My direct email is champ@creativeventures.vc.

Many laid-off engineers are launching their own startups: What are some of the skills/experience you look for in nontechnical founders?

We are looking for an industry-expertise edge. As an early-stage deep tech VC fund, our companies need to thoroughly understand their target market and customer in light of long sales cycles and an inability to pivot multiple times between rounds. Nontechnical founders need to bring their in-depth understanding of the market and industry as well as their connections.

Generally speaking, how much salary should the founder of a pre-revenue startup pay themselves?

It varies widely. Typically, however, anywhere between $50,000-$80,000 (and almost never more than $100,000), depending on location. It’s also worth mentioning that some founders pay themselves nothing in the very beginning, and this is a normal practice.

In June 2023, what are some of the top questions founders should be asking investors?

One of my favorite questions from founders is when they ask about our fund vintage, deployment strategy and LP composition. It shows that they are trying to decipher our real expectations and exit timelines rather than just relying on us telling them. It also shows that they are capable of thinking from an outside player’s perspective, which lends itself to their ability to negotiate with customers and deal with challenging dynamics.

What’s a traditional pitch tactic that no longer works but is still a common practice?

Mass, generic emails, hands down. Back in the day, when the seed fund landscape was still full of generalists, having a generic pitch was okay. Now, however, seed funds are specialized. You absolutely need a tailored pitch to remain relevant and looked at.

Are you open to reviewing pitch memos, or do you prefer a completed deck?

Much like outreach, we are agnostic when it comes to memos versus decks. If a memo articulates the problem a company is solving, the market it is going after, and what it does, we are satisfied. In the past, however, we have seen pitch memos that are overly concise and don’t really describe anything. There’s a fine line between an intentional level of brevity and saying nothing of interest in as few words as possible.

Tell us about the best pitch you’ve received recently: At what point in their presentation did you realize you were going to invest?

To be honest, the best pitch we’ve seen recently is for a company we haven’t closed a deal on yet! Overall, though, we don’t approach investment decisions as a discrete “invest or not invest” perspective. Instead, we look at these discussions with companies as a continuum of investment probability that increases (or decreases) throughout our diligence process.

As the process goes on, our investment team will converge on a couple of key things we need to prove out to make the investment, the outcome of which is what our investment decision generally rests on.

What are you reading/watching/listening to?

These days, I read a lot more about the macro environment — which is odd for a seed fund to do. We have a lot of companies that are raising later-stage funding so it helps to be equipped with an understanding of the public market and the broader economic environment (such as interest rate expectations and U.S.-China geopolitics).

This helps us build an informed view of when we can expect the public equity market to recover, which would signal late-stage funding and, subsequently, the growth stage where our companies are raising from, which we can derive our recommendation on whether companies should preserve cash flow or double down on spending and growth.
I have also started reading more about children’s development! Not only because my partner and I are considering parenthood but because, at the end of the day, someone I work with is always going to be a parent, whether that’s founders or people on my team. Empathizing with them as fellow human beings outside of their profession is a skill I seek to foster constantly.

Latif Peracha, general partner, M13

What kinds of investment opportunities are you looking for in June 2023?

At M13, we are generalists that primarily lead Series A rounds and focus on fintech, commerce, health and work, which includes the creator economy. Ultimately, we are looking to back exceptional founders with clear vision and tailwinds at their back. I am personally focused on how frontier technologies like blockchains and AI can transform these industries.

How do you prefer to be approached: a cold email, a warm intro or another method?

A warm introduction is always preferred. Cold emails work but they need to be thoughtful with a unique point of view. It also helps if the founder has done their homework on our firm.

Many laid-off engineers are launching their own startups: What are some of the skills/experience you look for in nontechnical founders?

I would look for domain expertise, and if there is none, then a clear articulation of how their experiences to date have led them to start this business. If they have gone through a consulting type approach of analyzing markets to find the startup idea, I am not interested. It must be more visceral. The “why” needs to be very clear. I would also look for the ability to storytell and recruit (in this case a technical co-founder or senior leader).

In June 2023, what are some of the top questions founders should be asking investors?

It has always been the same questions: Ultimately, understanding why the investor is interested in the business, how they can add value and ensuring they have a similar set of values. Investors often have tens of companies but you only have one lead investor (for that stage). Spend the time.

What’s a traditional pitch tactic that no longer works but is still a common practice?

Trying to manufacture scarcity. The market is the market so focusing on finding the right long-term partner is beneficial for both the founder and the investor. Spend the time. (Even if you are a buzzy AI company that has significant interest.)

Are you open to reviewing pitch memos, or do you prefer a completed deck? 

I still prefer a deck but have seen very effective memos as well. Irrespective of format, what is most important is a clear articulation of the business and how the founder plans to win.

What are you reading/watching/listening to?

  • Reading: “Smart Brevity,” which I highly encourage everyone to read from the founders of Axios. (Thanks to my partner Brent Murri for gifting me this.)
  • Listening: Fred Again and Brian Eno’s “Secret Life,” which is a great record to work to and is a cross-generational masterpiece.
  • Watching: NBA playoffs, entertainment at its best. The league has never been more wide open.

Rich Maloy, managing partner, SpringTime Ventures

What kinds of investment opportunities are you looking for in June 2023?

We are actively investing in fintech, healthcare, and logistics and supply chain. We invest at the seed stage in software-only businesses with the team based in the USA.

How do you prefer to be approached: a cold email, a warm intro or another method? 

If we’re a fit for you based on our focus areas, geo and stage, please share your startup here.

If you would like to talk with us, we hold open office hours every week. I respond to every inbound pitch, so you’re welcome to send me an email as well: rich@springtimeventures.com.

Many laid-off engineers are launching their own startups: What are some of the skills/experience you look for in nontechnical founders?

We’re looking for deep domain expertise and founders with grit, drive and focus, regardless of technical ability.

Nontechnical founders can lean on their domain knowledge and demonstrate they understand the problem they’re solving. Building a startup in an industry you come from gives you inherent advantages in the form of connections, customers and potential hires. You can also highlight past successes in your career; show how you are a versatile leader who can build and scale a successful startup.

If you are looking for that first technical member of the founding team, get out into your communities — online and offline — and talk about what you’re building. Share your vision and your expertise, and that you’re looking for someone to join you on this journey.

Nontechnical founders can also tap into the dozens of no-code tools to build a first version of the product. We met a startup that had tied together eight different no-code systems to prove their business model. As someone who loves Zapier, I had a deep appreciation for that.

In June 2023, what are some of the top questions founders should be asking investors?

Founders must dig in on a fund’s follow-on investment thesis and process. Follow-on rounds are a prominent part of the seed phase right now. Investors are doing far more follow-on investments in their current portfolio than in prior years, and we expect it will continue to be an important part of seed investing.

Your ability to raise that next round will depend on your current investors’ ability and appetite to participate in your seed 2 or seed extension. Here are some questions that you can ask potential investors:

  • What is your reserve allocation?
  • How do you decide who you’re going to follow-on with?
  • Can you give me an example of a follow-on investment that you’ve made recently?
  • Can you give me an example of a follow-on investment that you’ve chosen to not make recently?
  • What additional proof points do you need to see for a follow-on investment?
  • How does your follow-on process differ from your initial investment process?

Asking these questions upfront will help you understand what sort of a firm you’re working with and how they’re going to behave down the line when you need them the most. Choosing the right investors in this round will impact your ability to raise the next round.

What’s a traditional pitch tactic that no longer works but is still a common practice?

No seed-stage startup should ever have an investor relations person. It’s the CEO’s job to fundraise. It’s fine if you want to have someone do the research for you, but the outreach should come from the CEO.

What are you reading/watching/listening to?

  • Personal development: “The Power of Now” by Eckhart Tolle. I don’t know why it took me so long to read this. It’s incredible.
  • Professional development: The Daily Bolster daily 5-minute episodes — with a Friday deep dive — about building, funding and scaling startups. Hosted by Matt Blumberg, author of “Startup CEO,” “Startup CXO” and “Startup Boards.”
  • Sci-Fi: “The Prefect,” by Alastair Reynolds. A thought-provoking listen/read about how neuralink + AI + DAOs come together in the far future. Interestingly, it was written in 2007 and really nails the tech. It’s wrapped in a detective story and narrated by the inimitable John Lee.

Harley Miller, co-founder and managing partner, Left Lane Capital

What kind of investment opportunities are you looking for in June 2023?

Our mission is to partner with extraordinary entrepreneurs who create category-defining companies across growth sectors of the economy, including software, healthcare, e-commerce enablement, fintech, edtech and other industries.

I personally focus on consumer subscription and software businesses, marketplace models and fintech but we are also looking into vertical specific AI applications with strong commercial traction and fundamentals.

How do you prefer to be approached: a cold email, a warm intro or another method?

A warm intro is great, or even a cold email. We read any form of outreach.

Many laid-off engineers are launching their own startups: What are some of the skills/experience you look for in nontechnical founders? 

We look for skills such as business and industry knowledge, leadership and management abilities, sales and marketing acumen, financial literacy, persistence, resilience, and learning agility.

In June 2023, what are some of the top questions founders should be asking investors?

  • Where are you in your fund deployment?
  • What is the fund’s reserve ratio?
  • How many boards are you on? What is your largest position as a % of the fund and how much of your attention does it take?
  • Can you share an example of a company that didn’t work out and you dealt with that wind down as an investor? How did you support the company?

What’s a traditional pitch tactic that no longer works but is still a common practice?

  • Saying “AI” is everywhere in your product when in reality it is often just rules-based decision trees.
  • Saying we will be profitable when cash flow is still negative, but P&L profitability is positive.
  • Stating the company has multiple term sheets and the investor must make a decision in a few days.

Are you open to reviewing pitch memos, or do you prefer a completed deck?

Open, but decks are preferred.

Tell us about the best pitch you’ve received recently: At what point in their presentation did you realize you were going to invest?

We recently met a next-generation DTC energy drink company based in Europe; the brand and community that they had built around their product was so deeply authentic and vibrant. The founders embodied the brand at their core, and it felt so unique.

Their incredibly strong growth (while also being profitable) was necessary but not sufficient. It was their uniqueness and quality in their product that immediately resonated with me and drove us to put down a term sheet.

What are you reading/watching/listening to?

Peter Attia’s blog/newsletter.

Blair Garrou, co-founder and managing director, Mercury Fund

What kinds of investment opportunities are you looking for right now?

Mercury is currently investing in seed extension and Series A-stage startups that are bringing B2B and B2B2C SaaS and data platforms to market. Many of our investments, and current investment themes, revolve around AI and unique data offerings. Mercury focuses on startups that are at the early stages of product-market fit and will consider any company with at least $500,000 ARR.

That said, over the past 12 months half of our investments have been in Series A startups with at least $3 million-$5 million of ARR. We feel that the Series A round is “broken” in the middle of the country with the bid/ask spread between VCs and companies loosening considerably with gaps in ARR from Series A to Series B. That’s where we are finding a lot of opportunity.

How do you prefer to be approached: a cold email, a warm intro or another method? 

We are happy to be approached with either a warm intro or a cold email: blair@mercuryfund.com.

Many laid-off engineers are launching their own startups: What are some of the skills/experience you look for in nontechnical founders?

The skills/experiences and core values that we look for in founders are similar regardless of background. We look for founders who are:

  • passionate about their startup’s vision and ICP (ideal customer profile).
  • product-oriented, meaning they “own” the product/customer journey through their own unique experience.
  • have a unique/earned insight into their product and target market.
  • highly coachable, detail-oriented, resourceful to a fault.
  • capable of high degrees of intellectual curiosity.
  • comfortable stepping aside for a more experienced leader in the future should their startup exceed their ability to lead and grow.

In June 2023, what are some of the top questions founders should be asking investors?

  • How many recessions have you been through? If so, what was the last one like and what can I expect over the next 2-6 quarters?
  • How much dry powder does your fund have (i.e., when will the VC be pressured to raise another fund)?
  • What do you believe my metrics need to be to raise later-stage rounds of capital?
  • How does your firm think about the balance of revenue growth and burn rate?
  • What are your relationships like with later-stage investors?

What’s a traditional pitch tactic that no longer works but is still a common practice?

Applying fake time pressure to get a VC to make a quick decision. Time-boxing decisions typically don’t work in the middle of the country, where the nature of our funding environment gives us the luxury of more time to build relationships and make decisions.

Are you open to reviewing pitch memos, or do you prefer a completed deck?

We are open to reviewing any and all forms of communication about a new startup.

Tell us about the best pitch you’ve received recently: At what point in their presentation did you realize you were going to invest?

I met a brilliant young entrepreneur who is bringing an AI-driven platform to market to revolutionize community management for social and communication platforms. The entrepreneur, who splits time between Houston and San Francisco, was in our office meeting a former adjunct professor, who is now a VC and co-locates with Mercury. A 10-minute random encounter led to a two-hour meeting.

Learning about this entrepreneur’s life journey and experiences – and what led him to launch his new company – was incredibly inspiring. He never even showed me a pitch deck, yet I asked him how much money he needed to get going and told him Mercury would make it happen. It was a unique encounter that once again made me realize how fortunate I am to work in this industry with such amazing innovators and entrepreneurs.

What are you reading/watching/listening to?

Kristin Wilson, venture partner, Oui Capital

What kinds of investment opportunities are you looking for in June 2023?

Given the global economic downturn, I am keen to see opportunities that clearly demonstrate they are solving a need and so have real traction with paying customers.

How do you prefer to be approached: a cold email, a warm intro, or another method?

I’m pretty open actually, I just prefer that anyone who reaches out to me has a clear ask and has done at least a little bit of research. I can be reached at Kristin@ouicapital.vc.

Many laid-off engineers are launching their own startups: what are some of the skills/experience you look for in nontechnical founders?

I find the colloquial use of the term nontechnical for founders who are not software engineers extremely amusing. That’d be like saying that architects and quantity surveyors are nontechnical because they aren’t masons. In any case, I think if you are bringing on a co-founder to complement your particular set of engineering skills, you want to make sure that they offer a good balance to your personality and perspective.

You also want to be confident that they are capable of strategic and long-term thinking, can solve problems in sustainable rather than short-term ways and finally that they can operate with a clarity of purpose and are scrappy as hell. When you reach out to a potential co-founder, make sure your pitch is personal and seek to connect with them on a level beyond just the transactional. This shows a commitment to building a relationship, which leaves a lasting impression but more importantly, will be critical for navigating the morasses of venture building.

Generally speaking, how much salary should the founder of a pre-revenue startup pay themselves?

I think the specific amount depends on where they live and the individual’s circumstances, but I would recommend that they pay themselves a modest salary, if at all, until the company is generating revenue. Whatever you choose to pay yourself though, be disciplined about it, so that it’s not wildly variable sums from month to month or at random times in the month. Treat yourself as employee number one and set standards that will apply to subsequent early employees.

In June 2023, what are some of the top questions founders should be asking investors?

For angel investors:

What are your expectations of me as a founder? Are you a passive or a hands-on investor? What sorts of challenges are you best suited to support me with? Will you be able and willing to introduce me to other investors who can support the scaling of the venture as needed?

For VCs:

What are your investment criteria? What is your exit strategy for this investment? What kind of support can you offer to my company? What is the vision that you have for this company’s success that makes you amenable to invest? Will you be able to do follow-on investments?

What’s a traditional pitch tactic that no longer works, but is still a common practice?

I do not find it super-effective when a founder uses a statistic (an oft-poorly contextualized statistic) about how big the market is as a means to validate their business opportunity and valuation. Instead, talk about the market trends, customer psychographics and prevailing conditions that will help get your business off the ground quickly in the early days and keep it growing exponentially as your venture matures.

Are you open to reviewing pitch memos, or do you prefer a completed deck?

Definitely open to both. A pitch memo is a good way to introduce your company and your idea, but it’s not enough to get me excited about investing. I prefer to read a detailed document that outlines your business model, your financial projections, and your marketing strategy and all of this contextualized with industry and market opportunity analysis.

Tell us about the best pitch you’ve received recently: at what point in their presentation did you realize you were going to invest?

The best pitch I’ve received recently was from a team of founders seeking to address men’s health and lifestyle needs. The founders were passionate about their idea and had a clear vision for how they were going to intervene in the market. I knew I was going to invest in their company when they answered my questions with clarity and conviction and were able to articulate a sustainable value proposition of their product despite challenging market conditions.

What are you reading/watching/listening to?

“The Challenge of Closeness,” by Alain de Botton. It’s a good read that explores the nature of human relationships and the challenges that we face in maintaining close relationships.