tech | growth | venture | Perspectives from an operator turned VC in an underserved market
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Last week, the Council on Foreign Relations released a report on the ways in which blockchain could impact the future of our power grid.

Until recently, access to data on blockchain experiments in the energy sector has been fairly limited.  However, things are starting to change.  Last year, startups raised $300M through both traditional venture capital and ICO’s.  Two of the most heralded fundings came from Drift (consumer-to-generation) and LO3 Energy (peer-to-peer), both of whom are looking to connect consumers to the energy provider of their choice with distributed ledgers.


As I explained in a post earlier this year,  electricity trading transactions are still tracked in Excel or databases that rarely are connected but owned by large corporations.  This system adds millions in additional transaction costs and makes full transparency between market actors almost impossible.


A de-centralized ledger solves almost all of these errors and would empower new entrants (i.e. consumers with excess power capacity due to solar panels)  to enter the market.

Other than the power trading market, we see three major use cases for blockchain technology to impact the grid.


Grid Security and Generation Balancing- According to McKinsey, the connected-home market is growing at a rate of 31% year-over-year with ~30M homes having some form of IoT device installed.  The long-term result will be unparalleled access to data for grid operators and utilities.  Blockchain has the opportunity to help solve the problems of cybersecurity and data management that will come with this new paradigm. Without access to software talent, these service providers will need help from startups to build the capabilities that allow them to take full advantage of technologies like blockchain.  This transition is already underway in Europe where regulators and utilities are generally more forward thinking than their US counterparts.


TenneT, one of the Netherlands largest utilities, is working with Vandebron, a green energy supplier, to encourage owners of electric vehicles to participate in an EV-to-Grid (EV2G) pilot initiative.  Integration of power generation from renewable energy resources such as solar or wind power in combination with storage requires a more granular control to manage supply and demand. The project in the Netherlands is the latest in a long and growing series of technology initiatives to discover new ways of integrating new technologies such as EV and storage on to power grids.


Under this new program, TenneT will be able to store and dispatch power from consumer EV batteries in order to balance grid demand with supply. These EV2G transactions will be recorded and shared on a peer-to-peer (P2P) network using a permissioned Hyperledger blockchain. To encourage customer participation, TenneT and Vandebron will guarantee EV owners’ batteries aren’t victims of hacking in the process which is unlikely given the technology being deployed.



A permissioned distributed system based on the Hyperledger Fabric will allow grid operators real-time insights into distributed battery energy storage capacity across the network, as well as the ability to act on the information instantaneously and, perhaps in the future, automatically.  Eventually, collecting and recording distributed energy transaction data for use in the variety of utility-customer energy applications such as billing.


Infrastructure and Microgrid Financing- The US’ power grid is aging and well behind the rest of the developed world and our current political climate has prevented us from making large investments in infrastructure.  ICO’s could give both individuals and investors the opportunity to participate in the power grid like never before.


The use cases are wide ranging from peer-to-peer EV charging transactions to larger scale generation or transmission projects.  Blockchain could provide the ledger while ICO’s could easily be tied to the amount of power transmitted to the end-user (i.e. return based on output and efficiency).  It is important to note that this one is the most far-fetched of the three as it would require both consumers to become more educated and/or utilities to participate.  Both of which are far from guarantees.


Yet, this is the model that US-based LO3 Energy has experimented with in its Brooklyn Microgrid project without requiring too much engagement from local utilities. Customers can choose to power their homes via a range of local renewable energy sources while their neighbors can sell excess solar power back to them.  LO3 has opted to use a blockchain to keep the transaction record between its customer.  As is the case with all distributed ledger technology, the microgrid’s accounting is decentralised and shared by everyone on the network ensuring that tampering with these records is near impossible since everyone has their own, regularly updated copy of the ledger.


LO3 is now rapidly expanding with a series of other microgrid projects around the world where grid stability issues are a growing problem.  While it may be far fetched to believe the US could have grid stability issues, we should look no further than the recent disaster in Puerto Rico and subsequent landfalls of major hurricanes on the mainland to understand the loss of power for days / weeks is a very real possibility under the right circumstances.

A New REC – These market-based instruments represent the rights to renewable electricity generation.  They contain information such as generation source, the number of megawatt hours generated and delivered to the grid.  The immutable and transactional nature of REC’s makes them the perfect candidate to be placed on a distributed ledger.  Furthermore, the trading of RECs is currently highly specialized and opaque, a publicly available blockchain would open access to consumers and businesses alike.


Earlier this year, WePower, a blockchain-based green energy trading platform announced a successful $40M ICO, making it one of the most demanded projects of the year.

It helps renewable energy producers issuing their own energy “tokens” based on generation connecting consumers directly with the green energy generation and creating an opportunity to purchase energy upfront at below-market rates. This tokenization ensures liquidity and extends access to capital to finance new projects, but also gives the buyers a coin tied to a tangible asset, a fact that isn’t always true in the ICO world. The hope is that this access to a new capital infrastructure will be a bridge from renewable energy producers to new consumers thus making the grid a little greener.

Much like LO3, WePower’s technology creates an opportunity for a transparent accounting through a distributed open ledger, which records when and in what volumes green energy financed on the platform was produced and supplied into the grid. At the moment, such accounting is based on instruments as paper certificates in a similar fashion to RECs.


Of the three potential use cases highlighted here,  the ones that manage the increasing complexity (trading market, generation balancing, and cybersecurity) of the electric grid are the most likely to occur near term.  Utilities are under increasing pressure to better manage their costs and engage their consumers. In a world where devices are connecting to our grid at an exponential pace, it’s both as possible and difficult as ever.



Last week, Slack announced it had reached a deal with Atlassian to acquire its Slack competitors Hipchat and Stride.  First, it’s important to note that as a part of this deal Atlassian made a small equity investment in Slack as well.  Imagine being so far ahead with your business that your competitor sold you their IP and also makes an investment.

While it certainly didn’t generate the headlines of the Slack / Atlassian deal, Facebook acquired Redkix as it looks to take on Slack, Microsoft, and Google in the battle for workplace integration.

Speaking of Google, they announced a new set of features including smart replies to both email and chat as well as grammar suggestions across all of their MS Office competitors. All of this on the heels of Microsoft making a version of Teams free even to those without an Office 365 account.

What does all of this activity mean in the context of our daily work lives:

  • The tools are being developed are the beginning of a movement to free us from the most mundane tasks of our workday
  • A change in focus from email and task completion creating value on a per employee basis

Why does it matter:

  • Industries like energy (47), real estate (48.4), and agriculture (47) all have workforces that are significantly over the national median age of 42.2.  These industries are all large contributors to our GDP and face an impending labor shortage crisis or a large transfer of knowledge to new employees.  Either way, software is going to play a large role.
  • Consumer expectations for industries like healthcare and energy are changing.  We now expect all companies to engage with us and service to be completed as quickly as possible. SaaS companies that increase the efficiency of problem-solving for consumers while making employees happier (employee happiness is correlated with customer engagement) will be big winners in these massive industries.

Three trends worth monitoring:

  • Can Google and Microsoft expand their footprint inside organizations outside of their 3-5 core products?
  • Will Facebook be able to gain market share as it focuses on expanding Workplace in the face of slowing US growth?
  • When will we see these SaaS companies play a role in determining the optimal organizational structure for the large industries that impact us every day but are in desperate need of renovation?

One thing is almost certain, this space won’t begin to slow down anytime soon.  Engaging and making employees more efficient is going to be big business.

Employees have more information and choices than ever, the best talent will go where they are valued more on their impact than email output.  On the other side of the coin, organizational efficiency drives the bottom line which is obviously a decision criteria for any company looking to onboard new software.

Yesterday, I had the privilege of attending my first AUTM conference after being invited by Kerri Smith of the OWL Accelerator in Houston.  The topic of my quick 10-minute talk was “Ethics in Flyover Ecosystems” and it was part of a broader discussion on “Ethical Challenges Facing Startups”.

From their website:  “AUTM is the nonprofit leader in efforts to educate, promote and inspire professionals, throughout their careers, to support the development of academic research that changes the world. AUTM’s community is comprised of more than 3,200 members who work in more than 800 universities, research centers, hospitals, businesses and government organizations around the globe. The core purpose of AUTM is to support and advance academic technology transfer globally.”

Among the speakers were me, Kirsten Leute, SVP for University Relations at Osage University Partners, and Charles Valauskas of Valauskas Corder LLC.

Kirsten used a term – mirrortocracy -to describe the practice of hiring only those who fit a certain profile for a position. It’s possible I’m late to the game with the term, but I definitely plan on using it moving forward as there are so many possible use cases.

Below are the slides I presented, plus an additional one at the beginning which I left out but spoke to in order to create a frame of reference for what can happen when investor ethics turn in entrepreneurs’ favor.  Once a “market” is created for common terms, it puts everyone on an even playing field which benefits all involved.

Universities have a huge role to play in developing startup ecosystems.  They produce ideas, founders, and affordable talent for startups.  They are taking ethics from faculty, students, and outside parties like investors and mentors very seriously.  I really enjoyed being able to play a small role in their process and to give our perspective on the issue.
Thank you Kerri and the AUTM team for having me!

Directionally correct startups could be considered successful depending on the amount of capital raised, but ultimately fail to live up to their potential.  For most, the pull of the market ends early and the next phase of growth requires precise allocation of capital internally.

Subsequently, growth expectations begin to outpace what funding alone can accomplish and a ceiling in valuation is created.  This leaves the company unable to raise more capital, eventually leading to an exit that leaves investors clamoring for what could have been.

My hypothesis is that there are several companies which are acquired for somewhere between $20-$50M that fall into the category of directionally correct (accurate), but did not operate with precision during their early days.

Accuracy (n): the degree to which the result of a measurement, calculation, or specification conforms to the correct value or a standard.

Precision (n): refinement in a measurement, calculation, or specification, especially as represented by the number of digits given.

I’m admittedly still in the early innings and need to see more startups at this stage before coming to a valid conclusion, but I want to have a few key points in writing for reference moving forward.  In no particular order they are:

1)  The difference between these two groups happens during the time period between traction and scale.  That is, 95% (or some number larger than 80%) of the time, scale happens when startups execute with precision in product and marketing after their initial customers are onboarded.

2) The first few customers – the early adopters – were going to love the product and be the easiest to find regardless of how well the company executed.  The result is a lower bar than what most of the market will consider “viable” in an MVP and marketing costs were artificially lowered by initial consumer demand.  Counterintuitively, acquisition costs will actually go up after the early adopter market is completely exhausted.

3) Startups that scale don’t over-estimate the fidelity of the data created by early adopters.  Instead, they create a framework for discovering core product value for users which will be key to both growth and preventing customer churn in the future as they enter new markets or segments.

4) Market size (need) is correlated to the length of time a startup has to build a scalable customer acquisition strategy which is more than finding a blended CAC.  Precise startups understand how to achieve a sustainable ROI and focus on LTV (ex. bookings) acquisition instead of purely growth metrics (ex. customer count).  For example, at CE we knew a customer in TX had a substantially higher LTV than one in CT and adjusted accordingly.

5) Precision is defined as a repeatable process in the most vital parts of the startup like sales, marketing, and product.  Often, investors talk about “playbooks” and this is where they really punch above their weight.  If the market is X then we do Y or if we do A then the result is B are powerful indicators of precise execution.  Chamath Palihapitiya highlights the importance of this in a talk on “growth hacking”.  During his time at Facebook, they discovered if a new user hit 7 friends in 10 days they were hooked and built product focused on hitting this metric.

6) Once a startup crosses this threshold, the solution will have seemed obvious. The reason, getting there requires measuring and testing over and over and in hindsight, it’s easy to feel the data revealed a straight-forward conclusion and to discount the decisions needed to arrive at the right answer.

I’m looking forward to having more opportunities to help growing startups bridge the gap from consistency to precisision in the coming years while measuring the level of truth in the insights to refine refine them moving forward.

Pitchbook has released a new study on startup ecosystems and a few things immediately stand out to me:

1) TX has anemic local capital per venture backed startup. It’s WAY behind states with growing ecosystems like Tennessee, Utah, Michigan, Missouri, and Colorado.

Some might argue the number is artificially low due to the angel ecosystem filling the gap, but outside of Colorado and Utah the states mentioned above have very minimal VC activity. Additionally, the number of startups receiving funding hasn’t proven this to be true, bringing me to my second observation.

2) TX seed start-up density (# of startups receiving seed funding / pop.) is low. TX’s number is around 15 – several states are ~20+. This makes sense given the above – seed rounds are often led by local investors, and if there isn’t enough capital then fewer ideas are funded. However, Texas does beat IL which is a surprise given Chicago’s recent success.

3) Unsurprisingly, the density gap between established ecosystems like CA, MA and NY really grows in early-stage and late-stage funding. However, the gap is MUCH wider than I expected. In some cases, TX trails states with more active startup ecosystems by 5X.

All of these things are evident on the ground and it’s good to see data backing up the assumption more capital is needed in TX. The report highlights the need for startups to seek angel / seed funding that really understands the fundraising process and has a network to connect them to follow on capital.

You can find the study here.

I had the privilege this week of participating in a panel focused on developing startup ecosystems as part of the ITTN Cross Border Technology Summit in Suzhou, China.

The spirit of the conference was to encourage entrepreneurs to think globally about their opportunity and build relationships outside of any and all comfort zones, including geographic ones.

One of the questions asked of the panel was “what is your role in helping your innovation ecosystem think outside of its borders?” Admittedly, it was a question I had to think about for a second.

The answer that came to me most naturally was we encourage our companies to think BIG with their vision. This may seem obvious, especially in dominant ecosystems like Silicon Valley and Shenzhen, where global market share is the goal.

However, developing startup ecosystems are often different and the majority of early funding is provided from angels who have made their wealth in practical, but successful businesses. These investors want to see business plans rooted in the fundamentals leaving little room for ambition. This starts a cycle where founders are encouraged to think smaller with their vision because it’s what local investors want to hear from them.

Yet, these two ideologies aren’t mutually exclusive – you can think big while having an eye on building a sustainable business in the long run. Big, ambitious thinking when balanced with intense focus is a powerful combination.

We always ask ourselves, “if we get lucky and everything goes right, how big could this be?” It’s important to remember that venture capital is a business of maximizing the ceiling, not minimizing the floor.

After the panel, an entrepreneur found me to say he’d faced this problem when starting his startup which focuses on early-stage colon cancer detection. Local investors had told him the dream was too big and the problem too hard, but he kept pushing and found funding elsewhere.

If you’re angel investing in ecosystems that are just getting started, I encourage you to challenge founders to think big. Without your encouragement, society might miss out on the next big breakthrough.


Today, Intelis Capital is excited to announce our seed investment in Wndyr ( \ ˈwən-dər \), a company providing operational clarity to businesses by helping them become more efficient with the tech stack they already have in place.

Socrates is credited with the quote “Wonder is the beginning of wisdom,” and we believe wisdom is exactly what Wndyr will bring to companies who have trouble understanding how they use software.  Below are just a few of the many reasons we are excited to welcome Wndyr to the team.

1) Claire and team

When I first met Claire, I was struck by her experience and clarity of vision when it comes to the future of customer success and change management.  However, I must admit I left our initial meeting a little unsure of what exactly Wndyr did but impressed with Claire.  Wanting to learn more and gain clarity around the product, I asked Claire to come by our offices and present to Jonathan and Kevin; fortunately for us, she accepted.  Over the next 8 weeks, we got to know Claire, her co-founder Tracey, and her team through both direct interactions and speaking with their customers.

Some of the words that were used to describe them: committed, best-in-class, listeners, curious, open to learning, determined, thoughtful and intensely passionate.  In the following weeks, we learned more about the state of SaaS and customer success from the team than I thought was possible. Their vision for the role Wndyr would play in the future of SaaS had us hooked, especially when we saw how they executed against the vision day in and day out.

2) The aging workforce in large industries is a rapidly approaching problem

Industry % of Workforce % Older than Median Age
Utilities 5.3% 7.11%
Real Estate 6.9% 4.69%
Finance 2.1% 4.98%
*US workforce = 154,000,000 people

Several of America’s largest industries are facing the challenge of an aging workforce leaving them with a shortage of employees in crucial roles over the next decade.  This raises four critical questions for those industries: how to capture the knowledge of workers nearing retirement, what skills gaps will be created, can those skills gaps be automated, and do the industries have software to handle the excess capacity of work that could be placed on the remaining workforce?

Unsurprisingly, we believe Wndyr can play a huge role in answering all four of these questions.

Additionally, the US isn’t the only country facing the pressure of an aging workforce.  In the UK alone, over 50% of the workforce in key infrastructure industries such as water, power, and transportation are within 10 years of retirement age.  Given these figures, it’s not surprising businesses in massive industries are seeking solutions to solve this looming problem.

3) Productivity is shrinking in large industries critical to the function of the macroeconomy

The United States, and the world for that matter, appear to have a productivity problem.  US productivity grew a measly 0.1% in 2015.  Perhaps more surprising, that is ABOVE average for both developed nations and the world as a whole.

A deeper dive into the US statistics shows that productivity growth is being dampened by a few of our largest industries which I’ve highlighted in the table below.  The defining characteristic of the industries listed here is they all lag severely behind in the adoption of technology.

These industries will likely be forced to evolve into more digitized businesses over the coming decade much in the way advanced manufacturing and ICT have in the last 5-10 years.  We believe a digital revolution is coming in these fields and tools like Wndyr will be required for deployment scale, speed and accuracy.

Industry GDP Share Productivity Growth (2005-2014)
Healthcare 10.4% -0.10%
Construction 5.2% -1.40%
Public Administration 16.3% 0.20%
*2016 US GDP: $18.6T

4) Businesses are now over-subscribed to and under-utilizing SaaS products

All businesses are now technology companies in one form or another and the result is almost all firms are inundated with an abundance of software that is being either underutilized or unnecessary.  We’ve seen a new wave of companies being built to help manage licenses, increase the likelihood of customer success, and provide analytics to the SaaS companies themselves much in the same way a Mixpanel or Optimizely do for websites.

Given that 1,000 new SaaS companies are formed each year, we believe this opportunity will continue to expand while forcing incumbents to better serve their customers to remain competitive.

The winner in this space will help end-users SOLVE the problem, not just manage it, while still helping SaaS companies perform at their optimal level.

We are proud to partner with Claire, Tracey and the rest of the Wndyr team as they help bring next-generation wisdom to companies navigating today’s cluttered and inefficient SaaS landscape.

Recently, the tweet below from Austen Allred has shown up on a few separate occasions in my feed. One of the responses was from Leo Polovets who is one of my favorite VC’s to follow both on Twitter and at his blog.

His reply led me to this post by another must follow for aspiring VC’s, Charlie O’Donnell, of Brooklyn Bridge Ventures, a pre-seed / seed VC firm in NYC.  Charlie knocks it out of the park on how to execute conviction and the signal it sends to founders as well as other investors so I won’t be attempting to duplicate something that has already been written.

However, I do want to touch on where conviction has manifested itself thus far for us.  As it turns out, conviction isn’t just making (or leading) investments others won’t.  Just as importantly, it includes having enough conviction in your own process to stick with the plan as a firm even when an investment feels like a potential opportunity.

This is a tough balance because it’s also important to remain open-minded to non-obvious opportunities.  It’s early for me, but I think these questions have proven important early-on:

1. Are you willing to pick companies when no one else has yet?
2. Can you stick to a thesis?
3. Will you pass even when a company looks like it could be a good investment?

The first point here is fairly self-explanatory, do you have the conviction to write a check even when others have passed or haven’t yet?  Here, I agree with Charlie, only writing checks when others commit is telling the market “I’m not smart enough to be doing this alone.”

Importantly, this adds more risk to the riskiest stage of VC.  The size of these rounds means there is no guarantee that you’ll be able to get into the round once a lead is established.  Investors who believe early and are willing to take the lead get the deals.

This is common in underserved ecosystems where the seed-rounds are in the $1-2M range. Typically, these rounds only have 2-3 investors comprised of a financial lead and 1-2 investors who write smaller checks but bring additional resources to the table.

Discipline is the sidekick to conviction.  Bearing in mind that opportunistic investments do happen, the challenge becomes remaining convicted in a thesis and/or strategy even when good (not great) deals present themselves.  This is especially when the time between investments is longer than expected or just starting out when the results of the process are to be determined.

As Ray Dalio wrote in Principles, “Maturity is the ability to reject good alternatives in order to pursue even better ones.”  Alternatives, in this case, come in two primary forms: thesis (what I would call industry for us) and stage.

We have two primary objectives at Intelis.  First, we partner with companies that are impacting the slow-change economy.  Second, we invest in the seed-stage meaning if we invest too late it’s possible we are diluted to the point where even a home-run could result in minimal cash-on-cash returns.

It’s common for us to see great businesses in industries where we have little expertise, or within our thesis but later stage preventing us from getting an initial share that makes sense.  It’s easy to fall in love with great founders and businesses, it’s extremely difficult to stay disciplined enough to pass when the fit isn’t perfect.

I’m hopeful our acute awareness of the damaging effects of distraction and indecisiveness from our time as operators continues to translate in this new phase.

Conviction and discipline are so important in practice because they play a large role in the most crucial decision in investing, actually investing.

When we first started thinking about starting Intelis, we found capital was readily available in the locations we wanted to focus. However, it was from angel investors who’d achieved massive success in other industries and most did not want the role of the investor of conviction.

To us, being an investor of conviction goes beyond the capital, it means working alongside founders to hopefully increase the velocity and probability of scale.  We strive to win deals based on founders believing we’re the best partner for them because they’ve found during the diligence process our passion for what we do comes through.

Pre-closing and during diligence we work with founders to set proper “market” legal and financial structures to ensure incentive alignment for all parties.  Often, this means touching on delicate, first-time subjects for them like founder vesting or setting up employee option pools.

However, we approach these matters with the sobriety they deserve and work diligently to make it clear we empathize with the founder’s experience. We encourage them to talk to other founders, investors, lawyers, and accountants to ensure them we have the success of future rounds in mind and aren’t setting expectations outside the norm.

Once we make an investment in a team, we’re all in and make them our first priority.  Post-closing we’ll provide a massive amount of operational, hiring, product and/or business development support. Our job is to support them to the fullest in any and all ways.  That can range from meeting with consultants, closing potential employees, sitting in on product planning, or working on engaging partners.  The goal is to help our companies grow and learn as quickly as possible which means their problems are our problems too.

There are many informal ways in which we engage with founders: text, Slack, Telegram, and calls at any time.  However, we believe the first institutional capital should go beyond the informal and create habits that engage the executive team with investors on a regular basis.  

This means we schedule regular stand-ups, something we greatly benefited from as operators, where we check in on progress and ask which part of the business we can be most helpful.   We understand this isn’t for everyone, so we tailor it to the founder in terms of structure, frequency (no-less than every 2 weeks), and length.

We’re also big believers of the board meeting even in the cases where we are the first outside capital involved.  They are typically very informal at the beginning and evolve over time.  However,  we think this habit accomplishes two major goals: 1) it allows founders the time to step away from the day-to-day and think more strategically at least once a quarter and 2) it sets a foundation for recording progress and process that signals accountability to the next institutional investor.

We understand that this kind of focus on process and involvement at the early-stage is different and often unexpected (if not tedious).  This is especially true during the diligence process, when it’s likely we dig deeper into a business than the founder has experienced up to that point and after when we try to set Series A expecations for internal processes.

However, we think the data suggests this kind of approach works and it’s important to know that our founders are always in control of the agendas and structure.  Time will tell if we are right, but we think founders crave a high-level of engagement from their investors and the results are better because of it.

One of the biggest challenges of building a venture capital firm is putting together a reputation from scratch.   When we first started Intelis, I naively believed that building a reputation would be as easy as blogging regularly and pointing people to the values statement we spent weeks crafting.  As with everything, it’s more about actions than words.

Reputation to Founders

Being in a second or third tier ecosystem is a double-edged sword.  Investors have a chance to be a real agent of change by acting in the best interest of a company and its future investors by constructing term sheets and cap tables that preserve the long-term incentive structure for founders to pursue maximum upside.

However, it’s common (often rightfully so) to have to clear additional trust hurdles with founders, as they may be used to dealing with investors less accustomed to partnering with high-growth startups

At Intelis, we strive to be value-added investors.  Admittedly, almost all VC’s claim to be value added in one form or another so the phrase carries little to no value at this point.  To add another layer of complexity to the conversation, not all additional value is equal.  Jonathan touched on this subject recently on our blog.

The question then becomes how to prove our team adds beneficial and relevant value to a fast-growing startup even before we invest.  We’ve attempted various ways to solve this problem by creating a pipeline of both talent and customers as well as joining team meetings during the diligence process to ensure both sides feel good about the potential fit.

Reputation to Other Venture Firms

The universal answer to the amount of capital needed to scale a startup rapidly is “more.”  Given this requirement, we connect as often as possible with Series A investors to learn more about the metrics and processes that make investments attractive to them.

We attempt to play a small part in the trajectory of our portfolio companies not only through the value adds discussed above but also by setting up regular board meetings for strategic planning and bi-weekly “standups” for tactical discussions.   Setting up these processes early on helps founders become accustomed to the accountability larger institutional investors expect.

Warren Buffet once said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”  I’m hoping the processes we’re putting in place today help us build a reputation that allows us to work with the founders and investors we admire.

I’ve decided to publish a list of books I’ve read in 2018 to remember a key point or two from each.   Since this will be a living post, my hope is that it will be a resource for me and hopefully a few others along the way.  Below is the list of books I’ve finished this year in reverse order.


23. 12 Rules for Life – Jordan B Peterson

This was a book I continually saw on lists as a must read, but it fell a bit flat for me.  Some of the lessons were great, yet Peterson’s writing style and approach left me board and uninterested in how he arrived at the lesson.  Unlike Sapiens, Peterson’s use of anthropology and evolution felt forced.  My favorite line: “Dare, instead, to be dangerous. Dare to be truthful. Dare to articulate yourself, and express what would really justify your life.”

22. 7 Powers: The Foundations of Business Strategy – Hamilton Helmer

Definitely one of the best books I read this year, 7 Powers provides a framework for evaluating strategy and power within an industry.  The short formulas and organization of concepts made this one a must ready that I’ll continue coming back to in the future.  The lesson: strategy is a route to continuing Power in a market and Power is the set of conditions creating the potential for persistent differential returns.

21. The Systems Thinker – Albert Rutherford

This was a quick read and a little less technical than I had originally hoped.  My goal was to find a book that discussed Systems Thinking in practice instead of generalizing the major concepts.  It’s a great primer for systems thinking but does little to go in-depth.  The big lesson here: don’t focus too much on the little pieces, but instead the connections between them that create the bigger picture.  (AKA seeing the forest through the trees)

20. Think Twice – Michael Mauboussin

I’m not a huge fan of Mauboussin like others seem to be.  However, I enjoyed this book as I am reading on systemic thinking and biases right now.  Each chapter is a different bias and how it works in practice in the real world.  It’s worth the quick read and if anything will make you aware of the common biases that affect our everyday decision making.

19. Financial Intelligence – Karen Berman and Joe Knight

For one reason or another, I’ve always felt relatively weak when it comes to finance.  I think it goes back disliking the subject in school and thus avoiding it and working with people who were absolutely great at the discipline.  This book was a great if high-level, review of operational finance which is rare.  It wasn’t too technical nor too academic and had real-world cases with a refreshing lack of numbers for the subject matter.  Highly recommend if you are looking to brush up on finance.

18. The Truth Machine – Michael Casey and Paul Vigna

Much like all books that approach blockchain from a non-technical stand point, this book left me wanting more.  While the major point in the book are correct – energy, finance, healthcare, government can all be great use cases for the technology – there’s no deeper dive other than the very high-level insights.  I’m still waiting for the book that goes into the pros and cons of each proof of work, the scalability of each current technology platform, etc… that isn’t so technical I can’t comprehend it.

17. Regulatory Hacking – Evan Burfield

My favorite thing about this book is that it could have been formulaic, but Evan does a really nice job working anecdotal stories into the book to avoid falling into that trap.  The biggest takeaway here comes early in the form of “The Power Map” concept, which I think any startup would benefit from reading.  Other tips include selling into governments and other bureaucracies as well as navigating the different forms of influencers.

16. Thinking in Bets – Annie Duke

I was slightly disappointed by this book after it received a solid review by Marc Andreessen.  The first few chapters are really good and then it tails off from there.  The key ideas are great: thinking in terms of “Am I so sure about this I would put money on it?”, using confidence percentages over absolutes, and thinking more about the decision process than the outcome are all covered early.  From there, the book goes on to suggest strategies for putting those insights into action and becomes repetitive.

15. Made to Stick – Chip and Dan Heath

Two main concepts from this book to remember.  SUCCESs (Simple, Unexpected, Credible, Concrete, Emotional, Stories) and Curse of Knowledge.  The first concept is what makes ideas stick and the second focuses on why we don’t use each to make our ideas more sticky to others.  This is a great read for those focused on marketing or sales: i.e. everyone.

14. Everybody Writes – Ann Handley

70+ tips for better writing for everyone.  Because of social media and email, we are all writers rather we admit it or not.  Handley offers tips for all writers and some tips that are specific to the different types of writing.  Highly recommend for anyone looking to sharpen their writing skills.

13. A Guide to the Good Life – William B Irvine

I picked up A Guide to the Good Life after seeing it mentioned by several people on Twitter as a life-changing book.  While that is TBD, I really liked the Stoic concepts discussed in this book.  The biggest takeaway is splitting events into three categories: those we can’t control, those we can, and those we can impact but not control.  Eg. focus on preparing the best you can and don’t be upset if the results are not completely in your control.

12. Talent Wins – Ram Charan, et al.

I recommend this book on the “Critical 2 Percent” tactic alone.  Identifying the highest leverage employees is a no-brainer, but Charan and his co-authors take it to a new level by reframing who the 2 percent are.  (hint: it doesn’t involve titles or salaries)  The book is mostly focused on issues that affect larger organizations however, there are more than a few takeaways for any CEO regardless of company size.

11. Bad Blood – John Carreyrou

I really enjoyed “Hatching Twitter” so I wasn’t shocked that this book had me hooked from the first few pages.  I was amazed at the amount of dysfunction and incompetence that was displayed not only by Theranos but also by executives at publicly traded companies like Walgreens and Safeway.  To say the least, it was shocking.

10. Elements of Eloquence – Mark Forsyth

I was a bit disappointed by this one.  I expected a book that would be a guide to better writing and communication.  Instead, the book is a collection of several figures of speech.  I suspect they will be helpful as a reference moving forward and I will keep the book handy for future writing.  One great thing about the book, Forsyth is a great writer who kept a potentially boring subject from being dull.

9. Skin in the Game – Nassim Nicholas Taleb

My reading slowed down a bit in March & early April, but I did get to finish SITG.  For me, this was NNT’s most readable book yet.  I particularly enjoyed the Intellectual Yet Idiot (IYI) chapter, though I’m now very concerned with avoiding becoming one myself.   One of the more memorable insights from the book was that rigorous, well-executed research that is contradictory should be given special consideration, especially when the person conducting it has skin in the game.  This feels like a great analogy for venture capital, especially at the seed-stage.

8. The Black Swan – Nassim Nicholas Taleb

I re-read The Black Swan due to the fact that I didn’t think I fully appreciated the thinking behind it and in preperation for Skin in the Game also written by NNT.  I won’t spend too much time reviewing since this book has been thoroughly discussed online.  However, I encourage everyone to read this and other books that shed light on our biases and provide the reader with new huersitics for problem solving.

7. Blockchain Revolution – Don and Alex Tapscott

This book is probably a great read for those just starting to learn about blockchain, but if you know anything about the technology it’s likely too much of a beginner’s read.  I was already familiar with how the technology works at a very high level and the potential use cases.  Something I’ll likely write about later on that comes from a concept in this book is how will blockchain impact our workforce, particularly middle management.

6. Reset – Ellen Pao

It’s impossible not to feel for Ellen’s journey in Reset, and her passion for inclusion and lasting change is evident.  I also couldn’t read this book and take a side since it is from one perspective but I do recommend everyone read it.  We could all do better by learning about our conscious and unconscious behaviors which prevent the very best employees from rising to the top regardless of gender, race, or religion.

5.  Sapiens – Yuval Noah Harari

It’s hard to classify this as the best book I’ve read this year because they’ve all been fairly different, but in terms of writing style and readability, Sapiens is hard to top.  I likened Harari’s writing style to that of Carolo Rovelli but for social anthropology.  He takes an incredibly complex subject and makes it extremely enjoyable.  The book is exactly what it says, “a brief history of mankind” and puts into perspective just how insignificant we really are as individuals.

4. Powerful: Building a Culture of Freedom and Responsibility – Patty McCord

Patty McCord is best known for her role as head of HR at Netflix and the corresponding Netflix Culture Deck.  The book does a great job of highlighting the counter-productive nature of today’s HR and examines why companies don’t treat HR problem-solving in the same way they would product or marketing despite how well those strategies work.  My favorite insight from the book came in the form of resource allocation when it comes to salaries.  Most companies are either competitive with compensation or not, regardless of position.  Compensation doesn’t have to be a zero or one problem, startups can compensate the positions they most need well, while paying close to market rates in positions where top-level skill is not needed.

3. Man’s Search for Meaning – Viktor E. Frankl

A powerful book that I was convinced to read after seeing so many successful people recommend it in Tribe of Mentors.  I won’t spoil the one true freedom every man has, but needless to say, it had a big impact on the way I think about things.  I’m not sure there’s a book I’ve read that packs more punch in just a few short pages.

2.  Tribe of Mentors – Tim Ferriss

A quick and skimmable read. Tim asked the same 10 or so questions to a variety of extremely successful people and then put the best answers here. I read most of the interviews but certainly skipped over about 1/3.  The format of the book makes it quite easy for the reader to determine which interviews are worth reading and which may not be applicable.  This book will be a resource over time, especially when it comes to skills like being more diligent with my schedule and for exploring new books.

1.  Principles – Ray Dalio

A must-read for any business professional.  While most of us probably have a loosely defined set of values and norms, Ray has codified his after 30+ years in the investing business.  He encourages the reader to only take the principles they feel apply to them and create their own set of principles.  We could all heed Ray’s advice to be more cognizant and accepting of what we don’t know while being more focused on achieving success rather than appearing successful.

Last week I tweeted what I believe to be one of the best personal growth hacks for anyone looking to advance their career at an accelerated pace.  Find a mentor that is 2-3 steps ahead, which is about 24-36 months, but on a similar career path.


1) Their experience will still be relevant.  The best practices and advice they offer will still be current.

2) They are far enough removed to have seen results from the key decisions you are currently facing or will be soon.

Naturally, the question of “how do I make this happen?” came from one of my followers.  So I thought I’d answer it here in more detail.

Be authentically curious –  One of the best things about working in a startup is the opportunity to interact with multiple co-workers in different functions of the business on a daily basis. I was able to learn about engineering, finance, and marketing just by making it a priority to engage with our team.

I learned early to ask people what surprises them most about our business and what I should look out for in the future. This helped me understand how people thought, reduced my naivete of building a startup and increased my empathy for others which in turn created deeper connections with my co-workers.

Be a magnet for knowledge- Read, write, listen to podcasts, and take online courses to enhance your knowledge base.  The most important thing I came to realize was how little I knew.

However, others tend to take notice when you are learning new skills and attempting to put them to use.  I was naturally given new tasks because I’d learned some simple code or wanted to apply a concept I’d heard or read about to our business.

Give back 10:1 and expect nothing in return- Try to help in every way possible and expect nothing back.  Invest in other’s success and they’ll invest in yours.  Mentorship is no different from any relationship, it’s a give and take.  Attempt to give more than you receive and never expect the return, the right mentor will always repay the favor.

Be someone’s right hand- Find someone and be their go-to for everything possible.  I did this with my bosses and it paid off.  My job became very simple, to make other’s easier.  This helped me gain insights into processes and decisions that I would never have gotten otherwise.

Say yes a lot- This is the opposite of how I have to operate now, but as an operator who aspired to grow into new roles, I said “yes” to almost everything that was asked of me.  This doesn’t just pertain to high-level, “fun” work.  It may mean working 25-50% more, but the pay off is worth it.

Always ask to be challenged – Speak up and ask for the tough assignments.  You’ll get a shot you don’t deserve and you’ll have to make it happen by asking for help.  Asking for help is one of the best ways to connect while learning from those who have skillsets that are complementary or more advanced.  Asking to run the B2B platform at Choose is still what I consider to be one of my bigger breaks.

It’s important to remember that mentorship is a two-way street and not everyone will have the bandwidth or desire to be a mentor.  However, the steps I took above made me better regardless and at the end of the day, that’s was my real goal.  The right people will take notice and when they do it’ll be like adding a multiplier to your career.

In October, we published The Operations of Fundraising (Part 1 and Part 2).  One small section of the series covered how to identify the best potential investors for your startup.  These posts covered the basics like:

1) Average check sizes

2) Industries of interest

3) Understanding fund lifecycles

4) Portfolio construction

5) Building an investor funnel

With all of the revelations coming from Silicon Valley, it’s more important now than ever to research investors more deeply. The last thing any founder wants to do is give influence to an investor who creates more problems than they help solve.

There are two simple, but important, questions that can be answered just by checking a few references.

Are they good partners?

It’s always a smart move to ask potential investors to speak with the founders of their portfolio companies.  However, similar to reference checking employees, it’s important to call the references that aren’t on “the list”.

Don’t be afraid to find the companies they’ve turned down. The incentive to complement a current investor is high, while companies that have been turned down can sometimes provide better insight into the process.  Other avenues for vetting include lawyers and accountants that have worked with the investor in the past.

Obviously, firms that have been turned down by the investor could have a potential bias.  However, the quality and transparency of the interaction is often a leading indicator for decision-making and integrity which become crucial when faced with the inevitable challenges of a growing business.

I’m not suggesting that checking investor references should be only about finding negatives, but it’s important to get a sense of what a future partnership could look like.  This requires having a sense of both strengths and weaknesses of potential investors.  The more information the better.

How will they add value?

Capital is a commodity.  Early-stage startups should look for investors with operational experience.  Find investors who know how to build a team, product, or help with business development; things like finance often rise to importance later on, and even then operational finance still takes precedent.

It helps to know what your needs are, and what parts of the business are easily outsourced without sacrificing quality.  The only exception is when the investor will add value simply by association.

Pay careful attention to what’s not said by CEO’s of portfolio companies when attempting to answer this question.  If the investor has added value regularly and in a multitude of ways, it’s likely the CEO can offer specific examples of when they really made a difference.

Referencing is often tough and time-consuming which likely explains it’s not done more often.  However, learning the strengths and weakness of anyone who will play a major role in the company including investors is well worth the time.


Recently, Jonathan coined the phrase “the drag of orthodoxy” as it relates to regulated industries and their inability to quickly adopt new technologies even when they provide the best use cases.  Often, this is due to both the inability to implement new technology (easier to solve) and the opportunity costs of losing trust (harder to solve).

Digital adoption in these industries requires buy-in from traditional institutional mechanisms and an evolution of norms as well as consumer trust.

Unquestionably, the push of consumer expectations will continue to combine with digital forces to propel these industries past their legacy infrastructures and into a new age of innovation and growth.

Bitcoin could very well be the inflection point that is needed for mass adoption of blockchain technology in regulated industries and launches them into a new era.

We’ve been here before with less revolutionary technologies.  Marketplaces, enabled by wide-spread adoption of the internet have been around for over 25 years.

However, industries such as insurance and energy are just now beginning to leverage technologies like API’s to offer consumers the chance to compare plans just as they have flights for years.

The adoption cycle also applies to business model innovation. Uber and Airbnb offer on-demand services to better match supply and demand of goods.  It may not seem like it, but those companies are over 10 years old.

Just recently, we’ve seen startups like Honor and Trov apply the same concepts to elderly care and property insurance respectively.

The important thing to note is that just like consumer adoption of technology is rapidly increasing, the same thing is occurring in institutionalized industries.

Where can we go from here with blockchain in regulated industries?

Electricity transactions are still tracked almost exclusively in Excel before being submitted into databases that rarely are connected.  This system adds millions in additional transaction costs and makes full transparency between market actors almost impossible.

If smart meters and API’s wrote these transactions into a decentralized ledger, the errors would be eliminated almost immediately and new entrants (i.e. consumers with excess power capacity due to solar panels) would be encouraged to enter the market.

Healthcare provides maybe the most obvious applications of blockchain technology.  Patient information, research data, and prescription purchases all require privacy, security, and have rigorous standards for quality.

In finance, the unbundling of the job will require new platforms for the reintegration of common services like payroll, insurance, and financial planning.  Blockchain technology provides the perfect solution for transaction and ID verification.

The rise of Bitcoin and other cryptocurrencies has started a conversation centered mostly around their skyrocketing prices.  Yet, what is most exciting for me are the potential use cases that will come as the masses become more comfortable with the underlying technology and its ability to improve the industries that most affect their everyday lives.

2017 was a year of incredible change for me professionally.   We sold Choose Energy in Q2 of this year which triggered a wave of emotions that I wasn’t expecting. Subsequently, we launched Intelis Capital, a dream 18-months in the making.

While the acquisition was our goal, it was also bittersweet. Our team and leadership had worked so well together in the 12 months leading up to it, but the timing was right and I couldn’t be happier with the result we produced together.  Luckily, I still talk with most of the team regularly and hope we’ll have a chance to work together down the road.

Perhaps most surprising to me, was the feeling of anxious excitement that came once Jonathan, Kevin and I officially announced Intelis Capital.  We’d spent a lot of time strategically planning our firm and the brand we wanted to build, but there’s no feeling quite like the one that rushed through me once I realized my job was officially a partner at a firm I’d co-founded.

Partnering with Jonathan and Kevin continues to be an amazing experience, and I’m excited about the future as we work to execute on an ambitious vision in which we deeply believe.

If 2017 was an inflection point for new opportunities, 2018 will be about optimizing the way I work to accelerate the trajectory for potential growth. I ended the year still struggling to adjust to my new schedule and workflow, so my 2018 will center around getting into a rhythm that makes me most effective in my new role.

While most would say they want to read or write more, that strategy didn’t work for me in 2017. I read about the same and only wrote slightly more. Instead, I want to improve the prioritization and protection of my schedule so that I can work on the things that make me a better resource to everyone in my expanding network.

I believe, maybe naively, that this will lead to more research, reading, writing, and listening to podcasts. The goal is to increase the quality of the time I spend with others instead of the quantity.

The result will be me saying “no” more often, but will also give me a chance to improve the way I communicate that response moving forward.

It’s safe to say that regardless of what happens in 2018, 2017 marked a turning point in my life.  I’m thankful for all of you who continue to be a part of the journey.  With the backing of an amazing wife, which I’ve come to learn you cannot start a business without, I’m excited to expand on the opportunities that are in front of me.

It seems like a lifetime since I have been out of the retail industry.  Around this time of year, I always think of those who have to work through the holidays while most of us are able to enjoy time off with our friends and family.

The truth is, the time between Christmas and New Year’s Day is often the worst. The sales start trickling back as returns while stores are working feverishly to meet their year-end goals. Meanwhile, customers seem a lot less excited about returning gifts than the anticipation of giving them.

This year, as I was reflecting back on what a wild, crazy, and mostly lucky ride I’ve been on for the last decade, I realized several of the first business principles in which I now believe were actually born during those days in retail as I was working to put myself through college.

First and foremost, I learned that, as in all businesses, success depends on an entire team and culture starts with the hiring process.  Today, the staff we hired looks like this:

  • 1 doctor
  • 1 dentist
  • 1 Navy member
  • 1 special-needs teacher
  • 3 accountants (all with master’s degrees)
  • 3 team-members still working together, with 1 a Sr. Product Manager
  • 85% college graduation rate
  • 0 remaining in retail

I wish I could take credit for these numbers, but the truth is we hired people that had the determination to succeed long before they joined our team.  However, I realized during that time that I loved mentoring those who were going through big changes or making big decisions in their lives.

“The customer is always right,” is a phrase uttered throughout every service industry.  While I don’t believe this is the case for every interaction (and I’ve seen some bad ones), I do think it is correct from a macro perspective.

Fossil had built a reputation for trendy watches with a wide selection at a reasonable price.  Additionally, they’d built a vintage brand with a distinctly American feel.

For reasons, I still don’t quite understand, we pivoted to a streamlined selection and began to raise price points rather dramatically.  Customer purchasing decisions for Fossil were driven by brand, selection, and value.  All of which were drastically changed in the span of a year, decisions which our team had warned HQ against.

Enter Shinola: a watch company that has sold itself as a catalyst for the rebirth of Detroit, making a variety of durable goods at the higher price point Fossil so badly desired.  It wasn’t about price, customers wanted a product they valued from a brand that felt authentic.

The lesson: listen to your sales teams. They are the front lines of your business and interact with the customer every day. It’s possible they could be the key to raising prices while still winning the market.

Lastly, I learned that execution and operations matter.  More importantly, execution and operations often go unnoticed until they are being done poorly.

In retail, that may mean things like inventory being unorganized or poor scheduling leading to missed sales.

In early stage startups, that may mean poor product organization leading missed deadlines, bad database design making effective accounting and marketing almost impossible, or strategic meetings that lead to nowhere.

My time in retail was a necessary grind to help me accomplish a life goal.  However, looking back, I took many good lessons that helped me set the foundation for a few key business values which have served me well so far.

Finally, if you’re working in the service industries this holiday season, thank you for putting up with all of us and enjoy the well-deserved break after inventory in January.

For decades, incumbents in industries such as energy, healthcare, and finance have enjoyed the luxury of being protected by regulation. This has provided a moat against competition and eliminated the need for innovation leaving behind inefficient businesses and frustrated consumers. However, customer expectations are changing rapidly resulting in a demand for change and a major opportunity for building impactful, durable businesses.

Unsurprisingly, the concentration of talent in several regulated industries is actually higher outside of Silicon Valley and in cities where those sectors play an outsized role in the local economy.  This density enables several of the same qualities, such as network effects and proximity to potential customers, that make Silicon Valley a hub of innovation.  The metros listed below have a high number of industry experts and the technical talent to implement the solutions that will trigger a massive wave of disruption in regulated industries.


“I also see tremendous stuff happening in highly-regulated markets where there is such a demand for change. I think the dismantling of regulated markets through software is something to think about and watch.” – Chamath Palihapitiya


Energy: Houston

Houston is the energy capital of North America so it should be no surprise the city has a great chance to play a significant role in shaping the future of the energy sector. Texas accounts for 31% (335,000) of the nation’s oil and gas related jobs thanks in large part to its largest city and the international energy behemoths such as Exxon, Shell, Schlumberger, BP, and Engie that call Houston home.

The industry is full of seasoned employees who have spent most, if not all, of their careers in the space accumulating impressive field-specific experience. This dense, highly-specialized network creates unique advantages for energy-focused startups such as a labor-force with knowledge of a complex industry, hundreds of potential customers within close geographical proximity, and low-friction business development opportunities.

Traditional fuel sources aren’t the only major source of jobs as cleantech-related jobs number close to 50,000, while Texas ranks 1st and 9th in wind and solar generation respectively.  The diversity in energy sources has made Texas’ grid among the most complex and advanced in the US, but the fourth-highest penetration of smart meters (80%) gives startups the potential to easily access the energy usage data for approximately 7.5 million households.

Additionally, utility regulators in Texas are forward thinking when compared to the rest of the country and end-users are acutely aware of their energy usage due to volatile weather and comparatively large home sizes.  When combined, these factors make Houston the perfect testing ground for consumer and utility products such as demand-response, utility-scale IIoT, and grid security.

Sectors to watch: digital oilfield, cleantech, DER software, utility-focused IIoT


Finance: Atlanta

Atlanta affectionately calls itself “Transaction Alley” and with good reason.  Several of the world’s largest payment processors are headquartered or have major offices located in the city including First Data, Fiserv, Global Payments, and World Pay.  Additionally, Charlotte, currently the third largest banking city in the US, is only a one hour flight away.

These industry heavyweights provide Atlanta startups with the industry talent and local partnerships needed to fuel growth. One particular example is the Advanced Technology Development Center at Georgia Tech which includes a FinTech specific incubator funded in part by a $1M donation from World Pay in 2015.

In addition to large financial companies, Atlanta is home to large corporations like UPS, Home Depot, Delta Airlines, and Coca-Cola which provide growing startups with potential anchor customers. These firms don’t just represent large revenue opportunities, all of them have provided local incubators and co-working spaces with sponsorships and donations to support the local ecosystem.

The perception of Atlanta as a FinTech leader is already well underway due to the large successes of local startups Kabbage, Cardlytics, and BitPay.  For most, Groupon and Braintree helped to put Chicago’s tech ecosystem on the map. These companies have the visibility to cement Atlanta’s status as a FinTech hub for decades to come while incubating talent that could start the next wave of great companies in the space.

Sectors to watch: payment processing/disintermediation, cryptocurrency, authorization, automation


Healthcare: Nashville

Nashville is much more than the country music capital of the world. It’s also a major center of healthcare contributing more than $40B annually to the local economy and supplying residents with over 250,000 jobs.

The impressive numbers don’t end there.  Eighteen publicly traded healthcare firms, 4,000 small businesses related to healthcare, and Vanderbilt University (the 14th best medical research university according to US News) reside in the metro. The result is an unmatched opportunity for clinical trials via hospital systems like HCA and Vanderbilt as well as a large customer base software solutions for small and large practices.

Perhaps more than any other industry, healthcare requires a deep industry knowledge including, but not limited to, issues such as the regulatory pathway, intellectual property rights, and the role of insurance in the overall revenue of hospitals and small practices.  Nashville’s diverse but concentrated talent base provides founders with an abundance of resources as to solve these problems as they work to get their startup off the ground.

Sectors to watch: patient compliance, remote patient monitoring, small practice and hospital system operations


Regulated industries have been absent of major innovation for several decades but as customer expectations evolve these businesses will be next in line for a wave of disruption.  Due to the nuances of these sectors, it just so happens those waves are likely to be triggered from outside Silicon Valley. Instead, innovation will likely originate in the metros which know them best.

A few days ago, I published a post on the importance of setting up internal processes for fundraising.  Part II focuses on identifying the correct potential firms, interacting with them during the process, and finally closing the deal.  Let’s jump in.

Raising capital, like any sales process, becomes easier when you identify the proper targets and their individual goals.  However, in this case, a deal will hopefully lead to a long-term relationship with a partner or partners who want play an important role in the success of the company.

When raising institutional capital, there are generally two types of prospective investors: venture (private equity) and strategic (CVC).  It’s important to know the traits of each category in order to craft a pitch that will resonate and understand the terms that will matter if the deal begins to materialize.

Venture capitalists are primarily financially motivated. As a founder, it’s important to research a firm’s thesis, geo-focus (if applicable), and stage focus to find the best fit. While the chief goal for a VC is optimizing ownership, good investors are seeking a deal on fair terms that will leave the founder with enough equity as to maximize the incentive to pursue long-term value creation or seek additional capital.

Corporate venture capital is a little more tricky as it pertains to motivation.  Depending on the CVC, the reasons for investing can range from outsourced R&D, first-look at potential acquisitions, reduced customer acquisition costs, or synergies with upside potential.

It’s easy to imagine the difficulty in predicting the motivations of a CVC and the potential hazards that come with misaligned incentives.  Combine these uncertainties with the typically longer deal process and it becomes clear that raising capital from a strategic requires careful consideration.

The next factors are ones we see many founders neglect to consider: understanding both how and where you fit in a VC fund.

  1. How: the combination of thesis (discussed earlier) and funding stage.  In the slide above, we use a $100M fund as our example.  Typically, a fund makes 20-25 investments and reserves for follow-on. (note: this varies by fund, but this is the typical model).  Let’s assume this fund reserves $60M to maintain or increase its position in the winners, leaving $40M for initial investments. This means an average first check lands somewhere in the neighborhood of $2M. If you’re asking for $500K, it’s unlikely (though not impossible) this fund is too large.
  2. Where: the age of the fund and how this will impact the VC’s need for an exit.  Most investments are made during years 1-5 of a 10-year fund. Depending on the stage, a startup can be great for either end of that timeframe. However, it becomes possible to be pressured into an early exit due to a mistimed investment or have a board seat change hands in a secondary sale of equity.

It’s completely fair for founders to ask questions surrounding these issues.  I would argue it shows maturity in both understanding the venture process and wanting to ensure that both parties are completely aligned for the entirety of the partnership.

Much too often, we see cold-emails that are clearly of the “spray and pray” variety meaning founders are emailing as many potential investors as possible with no difference in message.  My advice to those startups would be to take a step back and really consider building a targeted pipeline of potential investors.

Start with a wide funnel that encompasses all the investors in either the industry, technology, or geographic region in which you operate then begin to narrow by the remaining criteria plus average investment size. For example, if you are a healthcare company in Dallas you might build a funnel of all healthcare investors which have done a deal in the last 12-18 months in the US, then narrow by the ones who have made an investment in your technology (ex. software/hardware), and finally by Texas.

Once you’ve selected the top 20% of firms that seem like potential fits, find the partners which made the investments.  Generally, all will have an online presence wether it be Twitter, a blog, podcast appearances, or just quotes in press releases, find something to use in the initial outreach which explains why it’s the right fit for a partnership outside of capital.

Though it varies from round to round and startup to startup, fundraising often requires thousands of interactions with hundreds of contacts.  It is essential to keep up with these contacts in an organized way while delivering positive news throughout the process.

For this reason, in addition to a CRM, we highly recommend finding a meaningful KPI which is unlikely to go down and sharing an update at the end of every week. The weekly update serves several purposes: it creates a trend line from dots, it shows accountability, it shows execution ability, and it keeps your startup at the top of the investor’s mind.

As the interactions with prospective investors increase, it becomes important to filter the noise and avoid “kissing a lot of frogs.”  After all, you’re still running a business and time is precious.  We encourage entrepreneurs to do their diligence on investors including asking service providers such as banks and lawyers for their opinions.  Association with the wrong investor can be a negative signal to the investors you covet.

Lastly, ALWAYS authentically respond to no’s.  They are an amazing chance to show humility and learn.  When a founder ignores a no, it feels like a confirmation, right or wrong, I made the right decision.  After sending a response, move on.  Time is money.

It’s often said time is the enemy of all deals.  Once a VC has agreed to invest, work to close as quickly as possible. Often, it’s hard to manage the process especially when it pertains to service providers but there are steps that can be controlled.

The groundwork laid in the previous post really comes into play as the close nears. Thorough research on comps helps guide the valuation process and an organized data room containing the appropriate materials increases the speed of diligence by reducing the need to find materials and limiting unnecessary communication.

Much like the previous post, this one was long in nature.  However, I hope these tips are potentially useful and maybe introduced a few unfamiliar nuances in the fundraising process.

Credit: John Tough, partner Invenergy Future Fund, for the inspiring the images used in this post.  

Part I can be found here.

Inspired by recent conversations with aspiring entrepreneurs and the questions they asked, I’ve been posting recently on topics that are useful during the fundraising process.

I’ve covered storytelling as a tool to help others emotionally engage with the business and displaying empathy for users via a heightened degree of customer knowledge.  Here, I’ll cover more of the capital raising process itself and a few tips that should make things go a little more smoothly.



Fundraising is commonly a long process that begins well before an actual roadshow and investment take place.  We’ve come to think of the capital raise in 3 distinct parts.

  • Part 1: Preparation and iteration – The key milestones here include getting the presentation deck prepared, inviting feedback from key stakeholders, organizing the data room with all necessary information, and creating a place to track investor outreach.
  • Part 2: Presentation and follow-ups – This step is self-explanatory and contains the presentation to investors as well as the follow-up conversations that occur after the initial pitch.  In the next post, I’ll dive deeper into how to identify and rank these potential investors as well as best practices in communication.
  • Part 3: Close – Speed matters.  Look to close the deal as quickly as possible after receiving a yes, uncertainty can derail the process if allowed.



More often than not, a snapshot of the headlines on sites like VentureBeat and TechCrunch can give the impression everyone is fundraising and doing so with minimal effort.

What’s missing is the real story, unless a startup is a runaway success, deals rarely come together quickly.  In reality, fundraising is usually a marathon that will test resolve and require luck along the way.


Despite that fact, fundraising is an amazing career experience, and with the right attitude, can be a lot of fun.  You’ll meet more interesting and successful people in a short amount of time than at any other point in your career.

It’s important to take advantage and learn from every interaction.  Great investors will force you to think outside the box about the business and highlight the potential hurdles ahead which they’ve learned from experience as operators and investors.  LISTEN, you’ll be better prepared for the next pitch meeting and to run the business overall.

Outside of the opportunity to learn, other benefits include adding new skills:

  1. Sales – Obvious example, fundraising is all about learning to sell.
  2. Leadership – Fundraising may have one point of contact, but it takes a team to build a deck articulating a well-rounded vision. Not to mention, the possibility jobs can be dependent on closing the round, placing an increased emphasis on communication.
  3. Presentation – Another obvious example, being able to present to large groups of unfamiliar faces only gets easier with practice. Additionally, the ability to craft a well-designed deck comes in handy. People love pictures.

Perhaps most importantly, fundraising is unmatched when it comes to teaching humility and bouncing back from failure.  Even small venture capitalists see ~500 deals annually, and make somewhere between 8-12 investments meaning “no” is the answer 98% of the time. While it’s important to understand the odds are steep, the fundraising process is an incredible experience that teaches career-long lessons like only it can.



Now that we’ve established fundraising is a difficult, but rewarding task, it is VITALLY important to know when to begin the process.  More often than not, we see many startups believe the process will take 3-4 months.  Our advice is to take that timeframe and at least double it.

The other crucial mistake we see is not raising enough capital for a given burn rate.  This is usually a combination of misunderstanding two variables, as mentioned the first is the length of the process, but the other is much more nuanced: negotiating leverage for the subsequent raise.

Attempting to close while the cash balance is dangerously low is likely to negate any negotiating leverage and creates the opportunity for investors to include less favorable terms.  These terms often have the tendency to become an issue at the worst time possible.

We advise raising no less than 12 months of operating capital and prefer to see startups targetting a raise that buys them 15-18 months of runway.  This creates a buffer in the event unforeseen circumstances such as a slower than anticipated average sales cycle or a longer than anticipated capital raise create a cash crunch.

Lastly, always know the seasonality or cyclicality of revenue and sales.  A downward trend, even if the YoY growth is great and can be explained, creates an unnecessary hurdle.  For example, if sales ramp up in Q1 and Q2 but cool off in Q3, it’s best to ramp the roadshow and target a close in those first 6 months or be confronted with undesired friction.

Once the decision to raise capital is made, the next step is often to create a “pitch deck.”  However, that’s only the beginning of the process.  Great startups recognize that fundraising is much more than a pitch deck, but a process that will likely take months and involve contact with dozens of individuals.  As a result, they build the process for scale.

This includes creating various presentations tailored to the type of investor and method of communication, preparing a data room that can be easily shared, and creating a CRM (excel, Hubspot, etc..) to keep track of each interaction.

One last tip, research market comps and use them to direct the narrative of the future.  I’ve seen several startups use this tactic, and when done well it can be extremely powerful.

This was a long post covering a lot of (hopefully useful) information.  If you made it this far, thank you for reading!  I’ll be back in a few days with Part II which will focus on identifying the right investors, keys to pitching them, and how to close the deal.

As always, if you liked this post, please share!  Part II can be found here.

Credit: John Tough, partner Invenergy Future Fund, for the inspiring the images used in this post.  

This week, behavioral economist Richard Thaler won the Nobel Prize in Economics. Thaler is best known for his work for disproving the traditional assumption that people make completely rational economic choices. If you’re a founder and not interested in behavioral economics, you should be.  A great place to start is Dan Ariely’s Predictably Irrational.

A few days ago, I mentioned the possibility of putting together a few posts on pitching and fundraising topics that are not covered as extensively as others. One particular topic that is often touched upon but, as evidenced by Thaler’s work, cannot be over-emphasized is the ability to demonstrate profoundly deep knowledge of your customer.

This capability is almost impossible to fake.  Either a founder speaks regularly to customers, both in-person and through data, or they do not.  Founders who have this deep knowledge are often able to easily speak to the customer behavior that is unique to their industry, and explain exactly which steps they took either with the product or the sales process to exploit these behaviors to the tune of traction.

A few real-world examples from startups include:

1) Understanding that in older, more entrenched industries a full technological leap may be unwanted or not possible.

There are a multitude of reasons this is the case, but the three that immediately come to mind are:  too risky from a financial or operations perspective, lacking the internal technical talent to implement or learn a new software, and the “that’s the way it’s always been done” mentality.  The quote below from Invenergy Future Fund partner John Tough perfectly sums up how founders should think about disrupting these industries.

No new technology solution is going to completely rip & replace existing software. Start-ups that expect to dramatically replace existing software architectures and make generalizations about weakness of existing solutions simply have not done their homework. @johnjtough

We’ve seen attempts to overcome these hurdles through slow-roll outs (note: slower revenue growth), taking increased responsibility for implementation (potentially higher costs), and inserting a human element into the process, think customer starts online but confirms via telephone (higher CAC).

Obviously, none of these options are ideal but are often necessary to gain traction within these legacy industries.

2) Learning that, much like B2C, in Enterprise SaaS it is still necessary to build for the end user.

Telling a visionary entrepreneur not to build the sleekest designed or most technologically advanced product possible seems counterintuitive. But, depending on your customer’s end user it could be the best possible strategy and a great way to conserve already constrained resources.  We came across this insight personally at Choose Energy on the B2C side and it recently surfaced again with a B2B startup with which we met.

Since I want to maintain the startup’s anonymity, I’ve made up this fictional example so please excuse me if it seems completely ridiculous on multiple levels.

Imagine building a software that optimizes call center or chat volume through algorithms based on inputs from the call-center agents themselves.  Who should the startup be building for?

My answer would be the call-center agents who are responsible for the inputs. The algorithm is only as good as the data it receives from the agents, who in most cases will be high school educated workers who are not interested in learning the newest technology but simply want to get the job done as efficiently as possible. A simple product that interrupts their workflows as minimally as possible is the way to go.

3) Adapting to a communication style that makes the customer more comfortable. 

Some new tech expressions can sound scary, especially to those in industries that have yet to be largely disrupted.

While phrases like “machine learning” and “artificial intelligence” can sound great in a deck or pitch meeting, potential customers often hear those words as the potential to remove the human element, i.e. them.

Another common phrase in the tech space is “cloud storage”, and while we think reliability and ease of use, some older industries think “unsecure storage.”

Founding teams who are exceptional at sales strike the right balance of communicating the value of their technology to management, get buy-in from those who the software will impact most, and make everyone comfortable during the process.

Knowing your customer is crucial in any business, but special founders are able to demonstrate unmatched insights into their customers.  More importantly, those founders turn these observations into distinct competitive advantages in sales, product, and marketing.

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