| I don’t have much input on the underserviced founder description. As someone in Florida where we literally 2-3 real VC’s, I consider our market underserviced regardless of race, gender, creed. But I understand and support helping any Founder, whatever the angle for identifying them. Regarding your underlying criteria here: “We expect founders to find a way to build and launch a product, get some amount of revenue traction, and have a roadmap to build the company profitably without relying on too much additional outside capital.” This resonates with me and I would like to provide some fruit for thought. I am actually in the process of launching a startup studio with the investment thesis of: <$50k for startups with large TAM’s (>$b) that can get product market fit in less than 90-days of the first $1 invested, and that can generate +EBITA within 12-months of the first $1 invested for $1-3m Seed. Here is feedback on my model and thesis. It may help you refine yours and if I can be I am going the studio route because I believe you need distributed teams. (specifically senior management, dev (support), design (brand/product)) in order to gain economies of scale in order to build such disruptive ideas efficiently. I call this concept a “Venture Lab” because unlike a studio I want outside founders to join with their ideas. So imagine an accelerator married with a studio. Here are some things to consider when your focusing on profitable startup building: Speed is the key. The longer it takes to build, the more burn. Hence my requirement of product market fit super fast. I define product market fit as the ability to generate revenue organically or through profitable customer acquisition models. If your going to be profitable fast... you have to be lean. Many vc’s want “great teams”. Unless the team has wealthy parents or some other means, they need to get paid. Therefore using precious cash. It’s a conundrum. Furthermore most founders have never spent tens of thousands or hundreds of thousands or millions of dollars that they are responsible for. It’s really different when your signing the check. If you can’t afford a great CFO who is doing a burn analysis and showing you your runway every few days you can quickly crash and burn. Your certainly not going to build a great product if your constantly running out of cash and fundraising (what I call “scrambling”). So to recap: Speed > Lean > Cash/Resource/Time Management Hence why I feel we (experienced distributed team called “the Lab”) have to be active in the venture building with the Founder. The model has thousands of years of evidence of working: war fighting. Whenever you see numbers of soldiers deployed to a conflict, only 10% are actually war fighting. The rest are support, supply chain, logistics, etc. supporting the 10%. Same concept. So the gist of my feedback is Don’t just write a check to underserviced founders, because their going to need a lot of support to: have a plan. |
There are a lot of both underserved and underrepresented entrepreneurs right now and and it's a real challenge to define the area of focus.
Point is well taken about not just writing a check. I don't get into it in this specific post because the pitch is basically Typical Earnest + a focus on underrep'd founders. But Typical Earnest already includes a community, shared resources, and access to an awesome group of mentors: https://earnestcapital.com/about/