Welcome friends! We thought we’d kick off this month’s newsletter by commenting on a story of real substance and significance that’s been flying under the radar — Elon Musk’s aborted takeover of Twitter.
Just kidding. We have far more important (and hotter off the press) news to discuss, including:
The close of our new funds!
Chris’s appearance on AdExchanger’s podcast to discuss the new funds!
Our latest investment — leading Steelhead Technologies’ recent Seed round!
Our New Funds
The good people at TechCrunch, AdExchanger, and AdWeek were all nice enough to write about our new funds and we’d encourage you to check them out (they provide a good overview). We already discussed our core investment thesis in some detail in May, so we thought we’d use this space to share some learnings on the fundraising process itself.
Key Takeaways From Repeatedly Slamming Our Heads in a Dra— … er… Fundraising
Learning 1: This is really hard. Actually, that doesn’t quite cover it. Startup fundraising is really hard. This is excruciating. And it takes 4-5x longer than any startup round (it’s worth it, though, so hang in there, new VCs).
Learning 2: Raising your first fund during a global pandemic and your second during a tech sell-off is not ideal and should be avoided if possible (write that one down).
Learning 2a: Don’t schedule the final closes of your first two funds for the Fridays before Labor Day and Memorial Day, respectively. I still can’t believe we did this (twice).
Learning 3: It’s a numbers game. We’d love to tell you that a well-crafted pitch, great team, strong track record, and carefully curated list of LP targets will get you there, but the fact is, you really can’t predict who you’ll resonate with, what/who else is competing for their attention and capital, or whether you’re simply catching people on the right or wrong day.
By the numbers:
Fund II LPs: 109
Final LP pipeline names: 517 (but those are just the folks who expressed enough interest to be real candidates, which means… )
Total prospective LPs pitched: 1,500 (at least)
No one knows this many people (not even Chris), so it’s critically important to ask everyone, even those who say “no,” for intros.
You have to pitch everyone who shows even an inkling of interest in any conversation, no matter how inappropriate the setting (and don’t worry, you’ll only feel gross hijacking casual conversations the first 50 or so times before you’re numb to it).
Learning 4: You have to take a perverse sort of enjoyment in the rough patches. A few of our favorites include:
Marveling at the artful ways institutional investors say, “We really just chase performance, so call us when you’ve had a huge exit or two,” without directly saying it. Even as it’s driving you nuts, you can’t help but be impressed at their wordsmithing chops.
The dread of knowing you’re about to make that same joke at that same part of the pitch where you always make it (not because it’s a bad joke, but because you’ve heard yourself make it so many times that you hate the sound of your own voice).
The time your prospective LP stopped you 30 seconds into the Zoom to make himself a sandwich, then sat and ate it at his kitchen island (well away from his laptop but still clearly visible on the Zoom) while reading the paper and never came back to the call. Not kidding; this happened to us. We watched him eat while trading “Is this really happening?” Slacks for 15-20 minutes before we gave up. And he never acknowledged that it had happened. No email, no text, nothing. It was surreal.
Learning 5: When people give you their hard-earned money to manage, do as right by them as possible, and they will be with you forever. Nearly all our Fund I LPs returned for Fund II despite only a 10-month turnaround between final close 1 and first close 2. Combined with their intros to new LPs, they probably accounted for two-thirds of our raise. In short:
Get as many people in as you can initially and let them see your work.
Be transparent with what you’re doing and why.
Be even more transparent about what you’re getting right and wrong and how you’re learning from both.
Be consistent and do what you said you were going to do. This may seem obvious, but a shocking number of people still fail to do it.
Learning 6: You’ll mostly hear that institutional investors won’t be interested until Fund 3 (unless you have a “Big Title at Big Tech” pedigree), and they’re mostly right. But make an effort to pitch them anyway, and make sure you keep sending them updates after they say no.
We have one institutional investor in this fund (shout out to Connecticut Innovations!) and our first meeting with them was in December of 2019.
Learning 7: Be open and honest with your fellow GPs, especially about the stuff that bothers you, before it boils over. Alternatively, you can just constantly make fun of each other like we do (if you, too, are emotionally stunted middle-aged men who are uncomfortable with feelings).
More Coverage of our Fund II and Tributary Fund
Our Latest Investment
LAURIUM, Mich. – Jul. 12, 2022 – Steelhead Technologies, a platform for processed-based manufacturers, today announced a $2.2 million seed funding round to expand sales and marketing, technology development, and growth of its team. The seed round includes investment from TIA Ventures and C2 Ventures, among other investors.
Steelhead’s software performs as a plant operating system. The platform modernizes and streamlines production environments through digitization, automation, and optimization while uncovering previously unknown data manufacturers can begin to leverage to drive more efficient processes and profitability. Steelhead’s goal is to improve the competitiveness and profits of manufacturing in the U.S.
“Today, manufacturers are under myriad pressures. From labor turnover, pressure on margins, traceability requirements, and customer service expectations, our customers have provided a roadmap of opportunity for technology in these plants,” said Jeff Halonen, co-founder, and CEO of Steelhead Technologies. “From tracking production cost and quality to training operators, digitizing workflow and paperwork, to automated custom plant reports, we are providing a digital foundation to unlock decades of growth in an ever more digital world with a platform that is flat out easy to use.” Read the full article.
C2V In The Trenches
Chris joined Allison Schiff on the AdExchanger Talks podcast to share why he started C2 Ventures. “The current VC system is broken. Entrepreneurs need advice and empathy in addition to money from founders who have been there themselves.” He also leaks a few secrets about himself that you would never have guessed.
“I have always told my kids that if you understand your superpower, triple down on it to level up in life and business as you get older.”
Chris also talks about how his superpower, relationship building, has grown his network and helped C2V reach a higher success level. Listen to the full episode below.
On a side note, have you subscribed to our YouTube Channel yet? We are building our channel to include funny and insightful founder interviews. You can check it out here.
Abode is now UnrealEstate.com.
Unreal Estate has built a completely new, high-performance software platform enabling multiple revenue channels with more coming soon:
For the first time, they can service home buyers nationwide.
Sellers will have a streamlined experience that enables home listings to be created in less than half the time of our previous system.
They have integrated with a mortgage company and plan to be live with a discount mortgage offering this summer.
Zero Trust Data Security MUZE Platform, by Phalanx, Reduces Breach Risk and Incident Response Cost with Automatic File-Level Encryption
MUZE provides data analytics, tracking, and visibility over files and unstructured data, a class of data currently challenging to track but provides significant cyber risk to an organization. In addition, MUZE leverages automation to bring encryption to the file level without burdening users or requiring classification, policies, or security decisions. "We listened to the needs of CISOs and wanted to help with the fact they are generally understaffed while having increasing data security requirements," stated Ian Garrett, CEO & Co-founder of Phalanx. Garrett further stated, "With Phalanx MUZE, they'll have more visibility into their organization's cyber risk and reduce the overall time and burden of providing provable data security to their staff."
Blutag is Using Voice to Improve Brand Recall and Customer Loyalty.
In the world of marketing and advertising, the concept of brand recall looms large. It’s how customers remember your brand, products, and services. Let's explore how voice can support you with the ever-elusive brand recall and customer loyalty.
Hank helps older adults connect and have fun.
“We’re building something special at Hank. Today, we’re proud to announce Hank has raised $7M in seed funding. Hank matches active adults over 55 with relevant events and activities like pickleball, art workshops, coffee meet-ups, skydiving, and more.
The idea for Hank was born out of my 10+ years working in tech. I realized we were only creating things for people 40 and under. Hank is meant to help people like my parents - recent empty nesters - who crave connection, variety, and meeting like-minded people in their hometown.” Brian Park, Founder, and CEO of Hank.
Driver Technologies Launches DriverPremium With CloudSync
The AI-based mobility tech company that delivers a safer driving experience announced the launch of the premium version of its No. 1 rated dash cam app, Driver®. The app transforms a driver's phone into a mobile driving assistance system and dash cam designed to make connected mobility technology more accessible and has users in over 170 countries.
Magellan.ai - We're growing at Magellan AI and need your help! In return, we're excited to reward Magellan AI friends & family who actively participate in our success by paying a referral fee for candidates you refer who gets hired. Here's the reward structure:
$50 Amazon gift card to anyone we phone screen
$4,000 for anyone we ultimately hire
Right now, we're looking to fill two types of roles:
Have a great candidate to send our way? Just directly introduce the candidate to me (email@example.com) or have them email a resume to firstname.lastname@example.org referencing your name. We'll take care of the rest.
Noteworthy - Senior Machine Learning Engineer - H1B Visa sponsor eligible.
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