Wednesday Wisdom from Kirsten Green, Founder and CEO at Forerunner Ventures
We’re halfway through the week, and it’s time for a boost of inspiration to keep us going. Our #WednesdayWisdom blog series taps into the minds of industry leaders and disruptive visionaries who are working to build the future of entrepreneurship.
We sat down with Kirsten Green to discuss perspectives from an investor about pitching your business. Kirsten is Founder and CEO at Forerunner Ventures, an early stage venture capital firm dedicated to investing in ambitious entrepreneurs to define and dominate a new generation of commerce.
When is the right time for a startup to begin pitching and actively fundraising?
At the earliest stages investors stand to be impressed by a founder’s vision, commitment and preparedness. In my experience the most effective way to show this is by demonstration. Be able to present your big idea in context of the market segment and your target consumer. Do your homework and be able to speak knowledgeably about your opportunities to differentiate, unique elements of your business model and how you will achieve growth and make money. Ideally you have executed some aspect of your plans to validate product, market fit. Even hacking a ‘light weight’ demonstration of your offering, service, product will help support your commitment, while also showing your resourcefulness (important too!).
What qualities do potential investors find attractive in women entrepreneurs?
The same qualities we find attractive in all entrepreneurs. At Forerunner the top three traits we prioritize include: visionary, disciplined, and magnetic. We believe these three area encompass most of the critical ingredients possessed by leaders able to turn ideas in action.
What are some common pitch mistakes that entrepreneurs should avoid?
Overstating urgency. We’ve experienced people using urgency as a means to activate conversations. If you in fact have an active term sheet, it is of course meaningful to share that there is a time constraint. Otherwise, applying time pressure, most often results in a quick pass, as it’s uncomfortable to be pressured and less than ideal to not have adequate time to develop a rapport and do proper diligence. Too many times we see founders circle back weeks later, offering to meet, which then raises flags that others have passed. While the best investors are independent thinkers, sensing that peers are skittish is typically not helpful to your process.
Not leading your own conversation. Investors aim to partner with confident founders who are able to lead and navigate an active conversation. When you allow an advisor or board member to outshine your efforts it can undermine your leadership capabilities. No one should know your business better than you – pitch time is your time to shine!
As an investor, what do you look for when deciding whether to invest in a startup?
There are a few common characteristics that we prioritize, and beyond that we are influenced by the make up of our existing portfolio and efforts to diversify. Generally, we consider the dynamics of the particular market/category, and whether it is ready for something new. A scalable business model is critical as venture capital goals prioritize efficient high growth. It’s important to have identified a viable margin profile; it’s understandable if the business needs scale to reach those levels. Assuming we are evaluating a consumer facing company, we look for ‘unfair’ marketing advantages. In an increasingly a crowded business and brand environment, being able to rise above the noise is critical. Finally, but certainly not last, a dynamic founder/leadership team is incredibly relevant.
We also place value on our ability to be a complementary partner to a founder(s). This includes bringing pertinent experience and forging a positive personal connection.
Tell us about the most memorable pitch you’ve ever heard and what made it stand out.
For a handful of reasons, the pitch for what became the first investment in our first fund, will always be a highlight: Birchbox. I had the pleasure of meeting founders, Katia and Hayley, when they were still in business school. In reflecting on their ‘pitch’ as I am writing this post, it’s true that they covered all the items discussed above. They presented a vision for a company that addressed a significant and growing category: beauty, with a model that focused on experience (sampling, education, community, personalization) and was new to the category (subscription sampling). They had run small product tests with their classmates, recorded feedback and considered that in their go forward plans. While they shared a clear a vision for the future, they also embraced input and feedback. And both passionate about the consumer and the potential to build something at the intersection of so many trends, which they ended up doing as well as reimagining the “of the month club” model with newly minted: subscription e-commerce. They made it easy to make that first fund commitment with confidence.
What gaps in the marketplace are currently being ignored that you’d like to see more companies address?
The new commerce cycle is in full swing. Generally, the market has recognized the significant evolution in preferences by the digitally savvy Millennial consumer segment, as well as the related shift in business operations fueled by technology innovation. Incumbent businesses are in various stages of acceptance and action to reinvent their business for the future, and while some will thrive and adopt new practices, while others will perish. With this transition in process, both situations continue to create opportunities for new companies and brands to capture market share.
While many categories have seen some disruption by new brands and offerings, there is room for more across the board. Specifically some areas we are intrigued by at Forerunner and see as under addressed relative to the scale of opportunity include: content/video driven commerce, AI assisted retailing, flexible inventory retail and product models, democratization and productization of services.
For an extra dose of #WednesdayWisdom, read our interview with Andrew Yang, Founder and CEO at Venture for America, a fellowship program that places recent graduates at startups in cities with emerging entrepreneurial ecosystems, forging a community of entrepreneurs committed to building companies that matter. We sat down with Andrew to discuss the reality of startup life.