It’s September 2020. What is the current state of the venture investing landscape? What is unique about this situation (COVID-19), and what is not?
We’ve kept our thesis and pace of investment unchanged. The most dramatic change has been the inability to meet and build relationships with founders face-to-face. This impacts both deal sourcing (leading to more cold outreach) and getting to know an entrepreneur through the due diligence process. The Motley Fool Ventures team has long been power users of Zoom, but even for us it has been an adjustment to feel comfortable writing a check to a founder whom we’ve never met in person.
What business and/or technology trends are you excited about looking forward?
One trend I have my eye on is audio & voice replacing screens as the preferred method of virtual socialization and engagement with content and brands. We were collectively getting sick of staring at screens even before the world went virtual and led to so many of us looking at screens all day for work and all night for entertainment. The popularity of audio has come a long way — Alexa is in so many of our homes and everybody and their mother seems to have a podcast – but the tech that powers the audio & voice industry is still pretty nascent and I’m excited to watch it advance.
What are some common indicators that an early-stage company will successfully scale beyond a startup? Common indicators that it will not successfully scale?
One sign that an early-stage company has what it takes to scale is attractive unit economics. Many startups remain unprofitable as they reinvest in their growth, and that’s okay so long as the underlying business model has the ability to turn profitable eventually. Looking at unit economics (revenue per unit sold minus variable expenses) is the key for me to understand this future potential. Negative unit economics are a red flag – it’s hard to get excited about top line growth when burn outpaces it.
What advice do you wish every startup founder could hear?
Reaching out to 10 investors with personalized messages will be more productive than sending 100 investors a copy/pasted note. And I don’t just mean changing the “Hi, [first name]” every time – really do your research. Most VC firms list their criteria on their websites. Curate your list and only reach out to the investors who actually fund the type of company you’re building at the stage you’re in. Tell them why their specific fund is a good fit for your business. The more personalized you can make it, the higher the chances of getting a response and moving to the next step.
About Kristine Harjes
Kristine Harjes is an Investment Officer with Motley Fool Ventures, a $150M early-stage venture fund based in Alexandria, Virginia. As a founding member of the team, she is responsible for sourcing deals, performing due diligence, and advising portfolio companies. Prior to joining Motley Fool Ventures, Kristine worked on The Motley Fool’s fool.com team. She cut her investing chops through hosting the “Industry Focus” podcast, and her analysis has been featured across Motley Fool publications. Kristine graduated summa cum laude from McDaniel College in Westminster, Maryland, with a degree in math and economics and on most weekends can be found playing sand volleyball.
About Motley Fool Ventures
Motley Fool Ventures is an early stage, technology-focused venture capital fund, powered by The Motley Fool’s brand, investing approach and communities.