The deeper I delve into startups and early-stage venture capital (VC), the more I'm convinced that success hinges on relationships. You can have a brilliant idea, a groundbreaking product, or an exceptional service, but without fostering connections, the path to success becomes considerably steeper.
Yes, some outliers make it big without a network. But more often than not, even these stories involve someone who played a crucial, if unacknowledged, role.
Let me illustrate with personal anecdotes:
Landing my first job: No matter how hard I tried, I couldn't secure a role alone. It took a recruiter with established relationships to unlock that opportunity.
A chance beyond qualifications: My application for a fellowship wouldn't have traditionally stood out. However, knowing the program director allowed them to see my potential beyond a resume, granting me a valuable shot.
Unexpected leadership: The opportunity to lead a startup accelerator came through a recommendation – a connection that wouldn't have existed without relationship-building.
Love finds a way (with some help): My personal life reflects this principle. I wouldn't have met my wife without the introduction from a mutual friend.
Sales through a trusted network: At my previous startup, our initial sales came from dentists our network knew well, a testament to the power of connections.
Early investor relationship advantage: We'd known our first investors at Tundra Ventures for years, highlighting the importance of building long-term relationships.
The point is that the seeds of success are often sown well before the critical "yes" or "no" moment, and we might not recognize them at the time.
This doesn't mean success is impossible without existing connections. However, it underscores the importance of playing the long game. Build relationships, nurture your network, and don't be discouraged if results aren't immediate. The connections you forge today could blossom into the opportunities you reap tomorrow.
Building Foundations, Not Walls: Practical Tips for Relationship Building
So, how do you cultivate these valuable connections? Here are some actionable tips:
Become a giver, not just a taker: Focus on providing value to others before seeking anything in return. Offer mentorship, share resources, or lend a listening ear.
Be genuine and authentic: People connect best with those who are true to themselves. Don't try to be someone you're not.
Become an active listener: Pay attention to what others say verbally and nonverbally.
Follow up and stay connected: Don't let interactions fizzle out. Reach out periodically to show you care and maintain the connection.
Leverage the power of communities: Join industry forums, attend events, and connect with relevant people on social media platforms like LinkedIn.
Attend industry conferences and meetups: These events offer a fantastic opportunity to network with like-minded individuals and potential partners.
Building relationships takes time and effort, but the rewards are substantial. By fostering genuine connections, you'll increase your chances of success in the startup world and create a more supportive and collaborative ecosystem for everyone involved.
Everyone needs to build a handful of new relationships yearly as professionals. Over time, you’ll have a strong network of people who can help one another when needed.
Being 80% Workhorse and 20% Showhorse as a Founder
In the entrepreneurial arena, founders often grapple with the dual roles of being a 'workhorse' and a 'showhorse.' Understanding and balancing these roles is crucial for success.
The Workhorse: The Backbone of Your Venture Being a workhorse means being deeply involved in the day-to-day operations, focusing on product development, team management, and the gritty details of running a business. This role requires relentless hard work, resilience, and a hands-on approach. A workhorse founder:
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Prioritizes Execution: They ensure that plans are translated into action and tangible results.
Values Details: Attention to the finer aspects of the business is crucial.
Embraces Challenges: Facing and overcoming operational challenges is a daily routine.
The Showhorse: The Face of Your Venture, In contrast, being a showhorse involves public relations, networking, and being the charismatic face of the company. This role is about articulating the vision, attracting investment, and creating a brand. A showhorse founder:
Excels in Networking: Building relationships with investors, customers, and partners.
Is a Visionary Storyteller: Effectively communicates the company's vision and mission.
Inspires and Motivates: Engages and energizes teams, stakeholders, and the public.
Why 80% Workhorse and 20% Showhorse? The 80/20 split emphasizes the importance of a solid operational focus while maintaining a visible and engaging presence in the broader business community.
Execution is Key: While vision is crucial, it's the execution that turns ideas into reality. Spending the majority of time as a workhorse ensures the company's core operations are solid and progressing.
Visibility Matters: The 20% showhorse aspect is vital for brand building, fundraising, and networking. It's essential for opening doors and creating opportunities.
Balance Drives Success: Too much focus on being a showhorse can lead to neglecting the essential day-to-day operations. Being only a workhorse might limit growth opportunities and external visibility.
Practical Tips for Balancing the Roles
Time Management: Allocate specific times for workhorse and showhorse activities. Stick to a schedule that allows you to focus on operations while dedicating time to public engagement and networking.
Leverage Your Team: Build a solid team to delegate tasks effectively. This approach lets you focus on strategic workhorse activities while your team supports showhorse functions.
Continuous Learning: Develop skills in both areas. Take leadership and public speaking courses for your showhorse role and operational management for your workhorse responsibilities.
Conclusion The journey of a founder is multifaceted. Embracing both the workhorse and showhorse roles in a balanced manner is crucial for your venture's sustainable growth and success. Remember, it’s not just about working hard or being visible; it’s about working smart and strategically visible.
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It's hard to believe that almost two years have passed since we embarked on our journey with Tundra Ventures, venturing into the dynamic world of Venture Capital.
These past two years have been a paradoxical mix of the longest and most challenging days of my professional career, yet also the most enjoyable.
This duality of experience is how I know that Tundra Ventures is not just where I want to be but where I need to be.
Starting a venture fund in my mid-thirties was never part of my grand plan. I had never imagined myself pursuing this path. But here I am, and with every passing day, I become more convinced that Tundra Ventures is the ideal place for me.
At this point in my life, I frequently ask myself, "Is this really what I want to do?" Without hesitation, my answer is always a resounding yes. This might appear as self-doubt, but quite the opposite; it's a practice I believe everyone should adopt periodically. We often become entangled in the daily grind and forget to assess whether our actions align with our goals and values.
Reflecting on the past 23 months of determined effort and perseverance, I thought sharing some key takeaways from this journey would be valuable.
Before diving further into my learnings, I'll start with a disclaimer that these are my thoughts alone and not those of my partners or other EMs doing the hard work.
Starting a Venture Fund Is Like Starting a Startup:
If you doubt this, you're mistaken. Nothing is guaranteed, and your accomplishments alone won't suffice. You need to demonstrate your abilities to potential investors convincingly. Moreover, after securing their investments, you must prove to founders that your fund is right for them.
No Shortcuts Exist - Differentiate Yourself:
Differentiation is essential in a world where every EM looks smart, has impressive credentials, and claims to have excellent networks. The fact is that network, skills, and experience are table stakes. The magic is in your ability to blend those things and provide actual value to your founders and, in turn, your LPs in the form of ROI. You must find unique ways to stand out. You, me, and everyone else have the same talking points, and all else being equal, you just get lumped into one big unidentifiable bucket of prospects.
Develop Resilience and Embrace Rejection:
Thick skin is a necessity in the world of venture capital. Rejection is part of the journey, and you'll encounter it more often than expected. It's crucial to learn from each rejection and keep pushing forward.
Learn to enjoy the wins (even the small ones):
I need to remind myself of this one dozens of times a week. It’s so easy to look past the wins and try to figure out the following problem. You need to take the time to use the good news to recharge your battery. Otherwise, you’ll burn out. Full stop.
Cultivate and Expand Your Network:
Regardless of how extensive your network may be, strive to improve it. Your network is one of your most valuable assets, and nurturing it can open doors to valuable opportunities.
Financial Scrappiness Is a Must:
Managing finances efficiently is not an option; it's a requirement. Being scrappy with your resources and making every dollar count is vital for the success of your venture fund. This whole notion that being a VC is ultra-lucrative is such a falsehood. Yes, is there a world where being a VC has great financial returns? Absolutely. There is also a world where you pour a lot of TIME and MONEY into an endeavor with subpar results.
Embrace Multifaceted Responsibilities:
As an emerging manager, you'll wear many hats simultaneously—business development, sales, marketing, recruiting, finance, and more. Be prepared to handle a wide array of responsibilities. Have the mentality that you’ll take the trash out in the morning and meet that high-profile prospective LP in the evenings. Have a full range of capabilities and become comfortable and willing to learn how to figure shit out.
Partner(s) or Solo? Think Carefully:
The decision to have a partner or go it alone is crucial. If you choose to partner, take your time to find the right fit. If you go solo, prepare for intensified challenges in your venture. There isn’t a right or wrong answer, but don’t go one way or another because you see someone else do it a particular way.
Nurture a Robust Support Network - Professionally and Personally:
Building a venture fund can be an isolating journey at times, and having a solid support network is invaluable. Professionally, seek mentors, advisors, and peers in the venture capital industry who can provide guidance, share insights, and offer a fresh perspective on your challenges. Personal support is equally crucial; your friends and family can provide emotional sustenance during the demanding moments of your venture. Balancing professional and personal support will help you navigate the highs and lows of the emerging manager's path with resilience and confidence.
Whatever Time You Expect It to Take and Double It:
The cliched “It’s a Marathon” analogy: Investment from your LPs doesn’t happen on your schedule as an emerging fund; you are at their mercy in many ways. Just expect it to take a long time and then a bit longer. Patience is critical.
Expect the Unexpected:
When we started Tundra Ventures, we didn’t anticipate banks going under. Nor did we predict that rates would go from near 0% in Nov of 2021 to the present day 5% (and climbing?). There is always a surprise right around the corner, the better you can do to be flexible and on your toes, the better off you’ll be.
Tundra Ventures has gone through many ups and downs, but overall, it has been a valuable and transformative experience. Emerging managers face many challenges and uncertainties but also have a fantastic opportunity in front of them. These past two years have strengthened my passion for this field, and I am eager to see how Tundra Ventures will continue to grow and thrive in the ever-evolving landscape of venture capital.
Suppose you are considering a career in this field. In that case, it is essential to research, ask questions, make meaningful connections, discover your strengths, and, most importantly, wake up each day and ask yourself if this is what you genuinely want to do with your life. It may not be the right time if the answer is not a resounding yes.
With all that being said, I wouldn't trade it in for anything else. It's where I want to be; I can't imagine doing anything else. The signal has never been stronger.
So what’s next? We continue to build the foundation brick by brick. There are no shortcuts. So, we will continue to meet prospective LPs, founders, and many other great people. I can’t wait to see what the next trip around the sun brings.
If you made it this far and still have questions, feel free to reach out any time. My email is adam@tundravc.com, and the inbox is always open.
Last week, I had the unique opportunity to attend the People Force conference hosted by TriNet, a three-day event held in the bustling heart of New York City. The conference showcased an eclectic mix of speakers and panels focusing on life, business, and the intersection of both. One highlight was actor and entrepreneur Ryan Reynolds' engaging talk on the second day. While lasting only 45 minutes, the depth of his insights left a lasting impression on me and, I'm sure, on many others in attendance. From the Deadpool series, Maximum Effort, MNTN Software, Aviation American Gin, Mint Mobile, or one of his most recent endeavors, Wrexham A.F.C. (he also is now in F1). Here's my rundown of the most compelling takeaways:
The Incredible Upside of Passion
Ryan accentuated the untapped potential residing in individuals who are deeply passionate about their work. He recounted his journey with the film Deadpool as an example. Despite facing initial rejection from industry insiders, his unwavering belief in the project led him to wave an upfront salary, choosing to bet on the movie's future success—a gamble that paid off spectacularly.
The takeaway: When you encounter people who are genuinely passionate about an idea or endeavor, it’s worth exploring further and maybe evening investing
Mastering the Craft of Storytelling
Ryan highlighted storytelling's indispensable role in various spheres of life and business. Whether negotiating a crucial deal, courting a prospective client, or pitching, your capacity to weave an enthralling narrative could be decisive. Stories captivate and establish an emotional connection, making them an incredibly effective tool for influence and persuasion. It is quite evident that storytelling is a huge part of what makes Ryan so successful. If you need proof of that, watch the first season of Welcome to Wrexham. It's a beautiful weaving of story telling between the community and the football team.
The takeaway: We are all innately storytellers and salespeople, whether we acknowledge it or not.
The Competitive Edge of Speed and Momentum
Ryan also discussed the strategic importance of quick, decisive action, using the example of the Peloton commercial controversy. He and his marketing agency seized the moment by rapidly producing a commercial for Aviation American Gin featuring the same actor from the Peloton ad. This timely move enabled them to make a significant cultural statement and capture national attention.
The takeaway: Speed is an underappreciated asset, particularly for smaller players in the market. The ability to act quickly can give upstarts and underdogs a competitive edge over more established entities. Don’t hesitate to take calculated risks; speed can be your ally.
Generational Wealth: A Marathon, Not a Sprint
Ryan touched upon a heartfelt issue when he discussed his newly-founded nonprofit, Creative Ladder, which provides opportunities for underrepresented groups in the creative industry. He talked about the importance of opportunity and awareness. He emphasized that building generational wealth is a long-term commitment. It may start small—perhaps with the purchase of a home or an investment in education—but over time, these foundational steps can result in substantial financial security for future generations. Through this non-profit, he hopes to help provide more opportunities for future leaders in the creative sector.
The takeaway: people need a chance to succeed, but even before they have a chance to succeed, they need to know what and where they have an opportunity to succeed.
Transparent Quality Matters: There’s No Hiding a Subpar Product
Ryan Reynolds' investment choices exemplify the principle that quality and impact cannot be compromised, especially in our interconnected, transparent world. Whether it's the unique taste and untapped market of Aviation American Gin, the consumer-centric affordability of Mint Mobile, or the community-boosting potential of co-chairing Wrexham A.F.C., his investments consistently focus on excellence and transformative impact.
Notably, an added layer of scrutiny accompanies these ventures simply because Ryan is already in the public eye. Unlike a lesser-known investor who might quietly exit a failing venture, Ryan doesn't have the luxury of anonymity. His fame elevates the stakes considerably; if a venture underperforms or fails, it’s not just a financial hit but potentially a dent in his public image. Being a celebrity investor or operator is like investing in the stock markets but with leverage.
This underscores the courage and conviction behind each of his investment decisions. The added risk that comes with fame acts as a double-edged sword—it amplifies the fallout from failure. It magnifies
the positive impact of success, not only on the business itself but also on the large audience Ryan naturally commands.
Ryan’s fame could be a liability, but he turns it into an asset by diligently selecting high-quality and meaningful initiatives he is willing to put his hard-earned brand behind. This allows him to leverage his public platform to improve the products and causes he believes in. It also serves as a cautionary tale for those in the public eye: the spotlight might offer tremendous advantages, but it also demands exceptional responsibility and due diligence. Therefore, his investment strategy isn't merely about backing winners; it's about being accountable and setting an example for impactful, quality-driven investments.
Key takeaway: while 99.9% of us won't become global celebrities, we can still take to heart the idea that we should only be willing to put our names and reputations behind things we truely believe in.
A Brush with Celebrity… Almost!
Post-event, there was a scheduled meet-and-greet with Ryan. The excitement in the room was obvious. Faced with many other eager fans, I decided not to add to the clamor. I know the last thing he wanted was another person asking for a photo and delaying his return to his family and other obligations in life. Instead, in keeping with the theme of 'taking your shot,' I emailed Ryan through every business contact I could find… After all, seizing opportunities is what it's all about, right? Right?? Look, I’m no fool; the chances of Ryan reading my email is about 0.001% (because saying it is 0.000% is depressing). If nothing else, it was an excellent way for me to absorb the message he conveyed on stage that evening. Most of which I’ve also turned into this blog post now (yay, content generation, thanks, Ryan).
Authenticity and Conviction: The Underlying Themes
Ryan's talk was a powerful reminder of the intricate tapestry of life and business. Whether you are an aspiring entrepreneur, a marketer keen on mastering the art of storytelling, or someone committed to leaving a lasting legacy, the guidance shared is invaluable. And while Ryan's core message emphasized the significance of storytelling, his authenticity and conviction shone through as equally essential virtues.
So, even though I can't claim to know Ryan Reynolds personally, his authentic nature was evident and added another layer to his message: Be true to yourself and tackle challenges with unwavering conviction.
I look forward to seeing Wrexham make it to the Premier League. I look forward to seeing Deadpool 3. I look forward to seeing what his F1 team does. I look forward to seeing more underrepresented people in the creative industry.
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“It takes 20 years to build a reputation and five minutes to ruin it.”
Warren Buffett
Why do so many early-stage founders envision fundraising as a quick sprint to a "yes," particularly at the delicate pre-seed and seed stages? The most uncertain and risky element in these initial phases isn't the product or the market. It’s the founder that is the most significant risk. The startup world operates on a principle vastly different from our legal system's "innocent until proven guilty." For founders seeking investment, the unspoken rule is often "guilty until proven competent."
I've lost count of the number of "first conversations" I've had with startup founders. A recurring theme in these discussions is their hope to "close the round in the next 60 to 90 days." Whenever I hear this, I can't help but think, "Is this confidence, or is it ignorance?" In either case, disappointment is often the result. This isn't a jab at the founder's qualifications, the idea's merit, or the startup's progress. Instead, it's a reflexive caution built on experience. I've learned that hastily made investment decisions seldom yield favorable outcomes.
So, here's what we'll unpack in today's random blog post. Grab a coffee, settle in, and dive into the complexities and common pitfalls of early-stage fundraising. Cheers.
The Marathon of Early-Stage Funding: The Harsh Reality for Startup Founders
Guilty Until Proven Competent: The Litmus Test for Founders
Entrepreneurship is a game that brims with optimism. Yet, there's a hard-nosed reality that many early-stage founders overlook: The fundraising process is more often a marathon than a sprint, especially in the precarious pre-seed/seed stages. Sometimes fueled by ambition and naiveté, founders commonly announce plans to "close the round in the next 60 to 90 days." While the urgency is commendable, it's usually a display of misplaced confidence or ignorance.
Timing is (Almost) Everything
My ears perk up every time I hear the "60 to 90 days" projection because it triggers memories of my own failures and mistakes. I've been burned enough times to know that rushing into investments often turns out to be a recipe for disaster. Due diligence takes time, relationships need nurturing, and trust is not built overnight. Founders often underestimate the complexity of wooing investors, who prioritize risk minimization at this stage.
The Volatility of the "Human Factor"
In pre-seed and seed stages, investors aren't just betting on an idea but on a person or a small team. This is arguably the most volatile and risky component of an early-stage startup. Business plans can adapt, and technologies can pivot, but the capabilities of the founder and the team are less malleable. Founders might be untested in leadership roles, unproven in market acumen, and unprepared for the psychological strains of startup life. This human factor necessitates a slower, more careful evaluation process, often at odds with a founder's timeline.
A More Realistic Approach
While enthusiasm is essential, it needs to be tempered by realism. Founders would do well to approach fundraising as a relationship rather than a conquest. Building a relationship with investors is akin to building a long-term partnership, and shortcuts rarely work. Here are some steps for a more realistic approach:
1. Network Early, Network Often:
Building connections in the industry long before you need to ask for money can make the process smoother when you eventually do.
2. Know Your Milestones:
Clearly outline what you need to prove and plan how you intend to do it well before you start the fundraising process.
3. Be Transparent:
Authenticity builds trust. Be upfront about what you know, what you don't, and how you plan to navigate the uncertainties.
4. Adapt and Iterate:
Listen to feedback from potential investors and be prepared to refine your pitch or business model.
5. Plan for a Marathon:
Buffer extra time for unforeseen challenges and multiple rounds of negotiations.
6. (Over) Communicate:
Be consistent with your updates; it’s essential.
In conclusion, fundraising in the early stages is a challenging endeavor that demands more than just lofty ambitions and a snappy pitch deck. Founders must prepare for the long haul, equipped with patience, resilience, and humility. It might not be a sprint, but running a good marathon often leads to the same end goal: crossing the finish line.
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