Full disclosure: I am newer to being a professional venture capitalist. I am also someone who worked for 2+ decades at software rocketships & struggled through the hard things about hard things at a pre-revenue start-up. Please consider the source and context as I simply do NOT know how NOT to help in any way I can the companies I engage with at Bonfire Ventures.
I also work at a very focused firm - we only lead seed-stage investments in B2B software companies, and we are all very involved with our founders - that is our differentiation, honestly.
There has been much recent narrative around the value and importance of having VCs involved or not in the early stage. I am super excited about the surge of capital available to start-ups early in their journey. That being said, the idea that it would be best to have a hot party round comprised of 10-30 amazing founders writing small checks to partner with instead of a traditional seed firm is specious at best.
If you are a serial entrepreneur and have everything figured out, that may be the best route. Although if that’s you, skip the seed stage and get a large blank check from one of the established Series A firms. Hell, if you have worked with us before, we will be thrilled when you carve out space for us because of our prior relationship.
This post is for the founder who has not figured it all out and is looking for more than just capital. This post is for the founder who is looking for a real partner who will help them move from a small team of 5-10 employees with big ideas and negligible revenue to a more fully-fledged company that is on well its way to achieving its vision.
Without further adieu, these are the top eleven items I would expect and want help from in the seed-stage partner I chose if I were out raising capital as an entrepreneur today. At Bonfire, this is the promise we make to our founders, and we do our best to honor it every day. We are not alone here - many amazing firms do all of these, if not more for their founders.
- Messaging: They will work with you to get your messaging right. They will run you through messaging workshops, listen to multiple chorus calls, etc., to help you find your fit that resonates with buyers to ensure that you are more of an obvious pain-killer than a nice to have vitamin.
- Product: They will spend an inordinate amount of time understanding your product and help you think through your long, midterm, and short term priorities. They will remind you that you must be product-first, and poor product performance and quality is simply unacceptable. Crappy products bug them to no end.
- Sales: They will help you build a proper buyer-driven sales process to make sense of your pipeline, momentum, and key areas of focus. They will help you think through sales compensation plans, sales capacity models, sales hiring profiles, etc. They will also guide you on whether you are an inbound PQL business or an outbound up-market business.
- Success: They will never let you under-invest in customer success. In early-stage companies where a product is often nascent, they know that great customer success is core to overcoming gaps and the best listening post for where next to focus. They will help you design and build your org as it moves from one catch-all employee to a fully-fledged organization.
- Teams: They will work with you to properly build out each of your organizations - moving from one individual contributor that does everything to specialized roles within marketing, sales, product, and success. They will get to know you really well and understand your strengths and weaknesses. They will help you build out your executive team and look for people who will accelerate your strengths and overcome your weaknesses.
- Finances: They will help you think through the appropriate financial plan to ensure you balance your investments and cash such that you can get to the next stage appropriately. They will help you identify your core metrics to focus on and track religiously. They will also never try to operationalize a business too prematurely, but they will ensure you invest in a balanced fashion across your functions.
- Governance: They will work with you to establish your company's priorities with a focus on the vital few and not the useless many. They will help you think through the proper business operating review & communication cadence internally and externally with your investors and boards. They will help you understand that board meetings are an output of this and not some special performative exercise on which to waste hours.
- Funding: They will work like hell to ensure you never run out of cash, including extensions when necessary. They will build your Series A target lead investor list and make introductions to each of them. They will provide a ton of tough love in reviewing your fundraising materials before you do the dance. They will help you close those interested behind the scenes and, if need be, they will be the first to accept being squeezed down from pro-rata if that is what it takes to make the round work.
- Spidey-Sense: They have been around the block enough to have an excellent ‘early warning system’. They can recognize issues that are developing before they are obvious to everyone else. They help you recognize them and, more importantly, help you mitigate them before they become serious. Common examples here are early churn signals, leading KPIs degrading, or festering people issues.
- Therapy: Being a founder is hard and often really f#$@ing lonely - there are so many fears and insecurities you have as you work through the path of birthing an idea to building a company. Your seed-stage partner is the first person you call when you are struggling. You can openly voice your concerns without feeling like you will be judged. They also know the questions to ask you to help you bring to light the “what should you do’s” that are already in your head.
- Empathy: When you win, they are super psyched for you and your team. When you lose, which happens all the time, they know what it feels like, and they bleed with you as they have been there, and they prop you up to ensure you keep your energy where it needs to be as it’s a marathon and not a sprint. They have restless nights as well - thinking through how best they can help you overcome whatever is the struggle du jour. They will convince you to "celebrate the win," no matter how small, to ensure you keep the energy up enough as all your employees feed off of that.
And finally, even though they may do all of these items for you, they never ever step in front of you to take credit for any of your success.
They measure their success by your success. That reward is far more than enough, and they, in the end, are honored that you picked them to join you on your journey. It is, as I have felt working with a number of our portfolio companies, an enormously rewarding experience.
