Hello everyone,
Here is a blog post showing my responses to a VC "cover letter"
1. Something I believe is true that nobody else agrees with…
As summer comes, I whole heartedly believe men's tank tops will make a comeback. If you follow college football, Ezekiel Elliot set the trend last year with wearing his patented tank top during the National Championship game against Oregon. I was at the game and saw Zeek run over defenders with his abs. Then during the 2016 draft Zeek walked the red carpet in a suit with half of his shirt missing. Now as Summer '16 (as Drake calls it) approaches, everyone is doing crunches to fit into summer appropriate attire. With our first few 70/80 degree days, there is no better way for a guy to show that he is ready for summer than to pull out his 80's style mid drift shirt and show off his abs to the world. I have a few crop tops ready for the warm weather! Zeek made it cool again.
2. Connecting with top NYC startups…
In order to connect with exemplar startups, I would call associates and analysts at VC funds, accelerators, and angel networks in NYC area that I have a good relationship with. I have been fully engaged in the NYC startup ecosystem and have a very good relationships with people from Techstars, Capital One Ventures, Corigin, Bain Capital Ventures, KEC ventures, 645 ventues, Collaborative fund, NextGen Venture Partners, SheWorx, Thrive Capital, WAAN, and HBS Alumni Angels. Associates are the gatekeepers to most funds and meet with 4-5 entrepreneurs each day. They funnel up quality leads to partners. With that much deal flow, not every entrepreneur ends up being a perfect match for a VC fund. Maybe one startup that an associate sources out of 150 matches a VC fund's thesis or investment criteria each month. So there is a natural tendency to refer good companies to other funds and investors. This would be the most natural way to connect with impressive NYC startups from day one.
3. A startup that TVP doesn’t know about (sell the opportunity)…
Direct to consumer plays in the medical space are disrupting traditional marketplaces where doctors were once the only suppliers. I think of how Sols is disrupting the orthotics space and how Opternative is disrupting the ophthalmology space. I was at a NextGen Venture Partners event and heard a pitch from Audicus. This startup is providing direct to consumer hearing aids and is also in the process of FDA approval for its online hearing aid test. The founder attended MIT and formerly worked at a PE fund before joining his other teammates and starting this company. They are growing revenue, optimizing costs, and creating a viable business. Hearing tests and hearing aids are expensive procedures and devices that are obligatory for patients and are controlled by doctors. Audicus is disrupting this value chain and capitalizing on a rapidly growing market.
4. Startup that I'm skeptical about..
Product Hunt! Lists are the new big thing (via Benedict Evans)…i.e. theSkimm, Morning Brew. I am skeptical that lists can make the leap from a daily email service to operating as a billion dollar media company. Multi-billion dollar returns are needed for VCs to justify their investment. When Instagram sold for one billion dollars, A16Z made a great return on investment but it didn't push the needle in terms of returns that the fund needs to have a successful fund. Lists mandate increased simplicity and reduced search friction. This seems counter-intuitive to a scaling venture-backed startup. The example that comes to mind is Reddit. Reddit's revenue from 2015 was ~$8M at 160M users. This is very low for a company that has been around for 10 years and that has very engaged users. I think that Product Hunt will fall into this revenue plateau/trap and not be able to justify a high enough return for its investors.