Saying Hello & Goodbye: Laconia's Internship Program

Saying goodbye to a family member or friend as they move forward in their life is always a bittersweet moment. It is that time of year at Laconia when we must say goodbye and thank you to our latest team of interns.

We run a paid part-time intern year-round, either for an academic semester, a full academic year, or a summer season. Our internship program has been widely successful, attracting talented students from NYU, Columbia, Cornell, Penn, Brown, UMich, and Rutgers, among others. In addition to intellectual curiosity, exceptional work ethic, and adaptable skills, they have all brought to the table a genuine passion for technology, entrepreneurship, and venture capital investing. Numerous former interns have gone on to pursue full-time opportunities at other venture capital firms and Laconia portfolio companies, with one former intern even re-joining Laconia full-time. Our interns are among the firm’s strongest ambassadors, often referring future candidates and budding entrepreneurs.

Our program fully immerses the interns in the inner workings of a venture capital firm, providing extensive first-hand exposure to all aspects of the work required. In preparation for the program, they read Ventures Deals by Brad Feld & Jason Mendelson, review Laconia’s Private Placement Memorandum, and become familiar with our portfolio companies. While with us, they are involved in deal flow & sourcing, due diligence, portfolio support, industry research projects, marketing, and operational support. We treat our interns as associates, and, in return, we get hardworking, smart thinking, and creative minds who allow our small team to accomplish so much.

We are strong believers in compensating them for their work along with providing them with a platform to learn, grow, and explore. Internship programs are great vehicles to allow young adults to dip a toe in the real world so they better understand the direction they want to take and the skill they need to develop. Payment extends access rather than limiting the field to only those who can afford to work for free.

I end this by saying goodbye to Jodie Miller and Ravi Shah and wish them all the best as they graduate and head off to PwC Strategy& and IA Capital respectively. They were stars and will be sorely missed. The good news is that as one door closes, another opens, and, with that, we welcome Naomi Grossman and Addison Huneycutt to the Laconia family - we can’t wait to see what you will create here!

Legal Tech Industry Landscape

One of our fabulous associate interns, Jodie Miller, put together an extensive report on the legal tech industry landscape - please check it out below. We hope this document can serve as a resource for future deeper dives and due diligence sessions on companies in the legal tech space. This project is a work in progress, and we hope it can be a useful starting part for anyone who comes across it. We look forward to hearing everyone's feedback and additions.

Moving Forward and Beyond: Our Statement on Diversity, Inclusion, and Anti-Harassment

The business case for supporting diverse teams is cut and dried. This blog is not the place for a recap of the comprehensive and compelling data on the topic. Instead, we want to move the conversation forward from “Why?” to “Here’s how.”

The past year, and especially the past month since International Women’s Day, has exploded with new voices, organizations, and initiatives for moving the tech and venture industries forward. It has sparked conversation and, more importantly, action, not just in the broader community but also in our own tight-knit office at Laconia.

When I received an offer to join Laconia full-time about a year and a half ago, I was ecstatic. Having entered the VC world at age 19, I had already learned the hard way how important it is to work with advocates and allies. My decision to join Laconia full-time was solidified in no small part by Jeffrey’s & David’s demonstrated commitments to transparency, inclusiveness, and empowerment.

This topic is deeply important to me, and I personally vouch for our whole team’s commitment to going to bat for underrepresented founders and to doing what is right. We will inevitably make mistakes. We will listen, learn, and improve.

Pushed by the #MovingForward initiative to articulate this commitment, we are publishing our official policy on diversity, inclusion, and anti-harassment. Part of me can’t believe that most of this has to be said, but here it is, loud and clear:

Laconia is committed to building a safe, transparent, and collaborative environment for our entire community, including but not limited to entrepreneurs, employees, interns, Limited Partners, vendors, and other ecosystem partners. Diversity, inclusivity, and transparency will remain core to our business and the community we are building.

We believe that investing in diverse and ethical teams leads to better decisions, outcomes, and returns. We are committed to increasing our investments in underrepresented founders, who comprise 23% of our portfolio to date (as of 4/2018). We will not back founders who have been found to engage in discrimination, sexual misconduct, or sexual harassment.

We have zero tolerance for harassment, discrimination, or retaliation of any kind with regard to anyone in our business network, including founders, investors, co-investors, vendors, and, of course, our own team members. We will appropriately and confidentially investigate reported misconduct of any kind. Any incidence can be reported to any member of our team.

We will continue finding the best ways to support, encourage, and engage entrepreneurs to build a more representative, safe, and inclusive community. We are adding the VC Inclusion Clause to all future term sheets and continuing conversations with existing portfolio companies regarding their diverse hiring goals.

Beyond our internal teams and portfolio companies, we are extending our diversity goals to our vendors as well. We are making it clear that team composition is a component of our evaluation criteria for vendors and partners, encouraging company-wide diverse representation and working toward ecosystem-wide progress.

Below are a handful of our active initiatives to expand access to the venture network to those who may not be connected to us already through traditional channels:

• Mentor Meetings: Any founder can sign up on our website to come meet with us for 30 minutes to ask any and all questions about raising capital and building their business. No warm intro or context needed; just sign up, show up, and share with other founders.

• Office Hours and Partnerships: Same idea as the above, except we come to you at your co-working space/incubator. Please reach out if we’re missing your space.

• Mentorship through organizations focused on underrepresented founders such as Monarq. Please reach out if you are part of an organization that could benefit from our time.

• We run an intensive, immersive, and mentorship-driven undergraduate internship program, training a pipeline of next-generation investors and entrepreneurs. 80% of our interns have been of diverse backgrounds. (Yes, we evaluate cold inquiries.)

• It might take us a while, but we do our absolute best to answer all cold inbound emails (blatant spam/mass mailings not included).

Lastly, this post would be incomplete if we did not highlight some of the many initiatives and resources that have made us exponentially more thoughtful about our processes & have pushed us to be more vocal about our goals:

• #MovingForward

• #StartWithEight

• NYC Blend

• Project Include

• Tech Inclusion

• All Raise

• NVCA Unveils Resources to Help Address Sexual Harassment in Venture Ecosystem

• A Better Path to Decency: Will tech lead the way?

• Diversity Doesn’t Stick Without Inclusion

• Why Diversity Programs Fail

• This is How Sexism Works in Silicon Valley

• There Is a Supply of Diverse Workers in Tech, So Why Is Silicon Valley So Lacking in Diversity?

• Tech Still Doesn’t Get Diversity; Here’s How to Fix It

We look forward to continuing this discussion about the role that diversity plays in venture capital, tech, and society more broadly to build a fairer and more productive world.

Who You Are: The Entrepreneurs We Seek

Originally posted in 2018, this blog has been updated as of March 2022 to reflect Laconia’s current investment focus, strategy, and process. If you remember reading something different before, you’re (probably) not hallucinating! For additional resources, you can check out our FAQ, sign up for an office hours session with our investment team, or submit your information for funding consideration.

This is part 3 of a 5-part series. If you haven’t done so already, you can read the first two posts here and here.

The more our portfolio grows, the more convinced we become that in the early stages of a company, the founders are most of the bet. We consider our portfolio an extension of our core values of transparency, collaboration, and community. So, when evaluating potential investment opportunities, we benchmark the founders against our existing portfolio entrepreneurs.

While there is no “one size fits all”, we’ve found certain commonalities in successful founders. Below are the core characteristics we search for:

• Deep business acumen & attention to detail: We love when founders know the key numbers of their business without having to check spreadsheets or reference materials. This attentiveness demonstrates a strong grasp on their business. At the pre-Series A stages, it’s crucial for the CEO to understand all functional divisions, especially business strategy and how it connects to capital strategy.

• Sales ability: We have an admitted soft spot for founders with strong sales skills in the early days. Founders aren’t required to have direct sales management experience, but we do expect them to have a deep understanding of customer segments and needs, go-to-market strategy, and customer acquisition models to close initial deals and begin the iteration process around determining eventual sales structure. If the founders can’t sell, we’re not buying.

• Transparency & collaboration: In order for our partnership and the Laconia community to work, founders’ core values must align with ours. We search for entrepreneurs who are open to feedback and discussion, don’t hesitate to ask questions, and demonstrate coach-ability, and over-communicate. These characteristics enable us to build strong and lasting relationships. As one example, one founder shared so much with us during due diligence about his father’s role as a trusted advisor to the company that we were curious to meet him ourselves - and we are so glad we did. This openness resulted in a much deeper understanding of the company's history and, ultimately, a stronger partnership.

• Confidence & focus: We search for founders who are hands-on and heads-down, interested in building a business, not growing their personal brands at the expense of business focus. You most likely will not find any of our founders on a TechCrunch stage. There is no aggrandized ego involved in their process of growing a scalable, sustainable business, just pure drive.

• Self-awareness: Often in a first meeting, we ask founders, “What keeps you up at night?” In the answers, we look for people who strive to understand their strengths and weaknesses and try to know what they don’t know. One of our founders, for instance, could not have been more direct with us when he told us “I know how to build this business, but raising capital is a whole other ball game.”  We could work with that and help compensate immediately.

• Integrity: This one is pretty simple. We believe that bad behavior is bad for business. Who you are personally is who you are professionally. The way you treat waiters, receptionists, and VC interns is indicative of the way you treat your vendors, customers, and employees. Honesty and respect are of utmost importance.

• Diversity: The research that diversity drives stronger business returns is comprehensive, compelling, and central to our investment activity. We track diversity in our pipeline and portfolio (see metrics on our FAQ page), and we actively make ourselves more accessible to founders outside of our existing networks through our office hours, mentorship at incubators and accelerators, and involvement with diversity-focused organizations. This commitment flows down to our companies as well. We are always open to suggestions on how we can better support diverse founders.

At the end of the day, every investment we make is, first and foremost, based upon partnership. Our trust in our founders’ ethos — and their trust in us — is paramount.

Our next two posts will spill the beans on what you can expect from us during the investment process and as part of our portfolio. How do we hold up to our end of the bargain? Stay tuned. In the meantime, let us know if you have any feedback here or on Twitter — @jsilverman22, @djarcara, @geri_kirilova, @JailwalaReena.

Finding Gems: Our Investment Thesis & Parameters

Originally posted in 2018, this blog has been updated as of March 2022 to reflect Laconia’s current investment focus, strategy, and process. If you remember reading something different before, you’re (probably) not hallucinating! For additional resources, you can check out our FAQ, sign up for an office hours session with our investment team, or submit your information for funding consideration.

This is part 2 of a 5-part series. If you haven’t done so already, you can read the first post here.

Very often when we meet founders, whether they are pitching their company for investment or just asking for our insight during one of one of our office hours sessions, they ask what would make them a “sure venture capital investment opportunity”. The short answer we give is that there is no such thing, because every single VC firm has different investment theses/parameters. One perspective we can offer is the overview below of our own strategy.

Solving High Pain-Point Problems in Existing Markets & Workflows

On a broad level, we invest in the next stage of legacy industry digitization. We are focused on companies using technology to solve high pain-point problems and inefficiencies within existing markets and workflows. We still see massive opportunity in traditional sectors, as they transition from pen & paper processes to digital solutions, from fragmented digital solutions (e.g. Excel spreadsheets & in-house tools) to better workflow platforms, from workflow platforms to AI-powered analytical systems, and so on. As technology evolves, new business use-cases emerge, creating an endless loop of investment opportunities.

To be clear, we are not investing in incremental solutions. Much of our analysis of companies’ potential is through the lens of a founder. As an investor managing a portfolio, you have multiple shots at success.  As an entrepreneur, you place your bet on one shot, typically for a minimum of 5 years. A quick mental model we use to evaluate the upside potential of an opportunity is “Would I be excited to join this company for the next 5 years?” If the answer is yes, we’d seriously consider the investment opportunity.

Pre-Seed & Seed B2B Software

To dive into the specifics, we invest in pre-seed & seed-stage B2B software companies, predominantly headquartered in the US & Canada. We typically write checks of $250,000 - $1,000,000 in rounds of $1M-$4M. Within B2B, we are sector-agnostic, with investments in fintech, e-commerce infrastructure, supply chain, hospitality tech, retail tech, digital health, and more. Depending on the company’s stage and capital needs, we have some flexibility beyond these guidelines, but this is where we are spending the bulk of our time.

Below are the considerations driving these investment parametrers:

• Capital efficiency:

  • Focus on fundamentals: Our <$1 million investment amounts are best utilized in capital-efficient companies that can achieve “break-even optionality” before/after their Series A round. While we are, of course, seeking outsized returns (i.e., companies that have the potential to reach $100M+ in annual revenue), we believe that setting a strong and sustainable foundation in the early stages — before raising tens of millions of venture capital dollars — is critical to ultimately achieving that outcome. As we all know, the more money is raised, the higher the bar is for an exit. We are cognizant not only of our own equity stakes but also our founders’: we want them to be in the strongest position for their best possible personal outcome rather than pricing themselves out of most lucrative exit options.

  • Early B2B traction: Typically, B2B companies are more capital efficient (at least in the early stages) than B2C ones, which typically require significant upfront capital for user acquisition before activating any revenue models. We typically like to see some validation of market demand and ideally early revenue & customer engagement metrics before investing.

  • Software scalability: Though we are typically sector-agnostic, we do focus on software & avoid capital-intensive segments such as energy, agriculture, most hardware products, and two-sided marketplace models with high capital requirements for “chicken or egg” user acquisition models.

• Business resilience:

  • Active support: We build concentrated portfolios driven by strong conviction and and high support. As a result, we are intensely committed to all of our portfolio companies; we don’t write off & walk away from them when they hit a rough patch. Given our expectations of a higher-than-average portfolio success rate, we focus on companies that are solving mission-critical problems.

  • B2B inevitability: While many B2C companies rely on customers’ (somewhat unpredictable and fickle) tastes, B2B problems and solutions are typically objectively definable, identifiable, and quantifiable. In most cases, you can put a number to how much time and/or money is wasted by or allocated toward solving a given business inefficiency. Additionally, solutions to high pain-point problems typically have an “inevitability” to them. As just one example, AutoFi connects car dealers & lenders to enable the purchase & financing of vehicles instantly online from home, a solution that is undoubtedly bound to exist.

  • Market validation: While we don’t have hard revenue minimums to consider an investment, we like to see validation of customer demand, product stickiness, and, if possible given the company’s stage, high retention. Though the actual metrics and key indicators will vary from company to company, we are fundamentally looking for evidence that a given product is a “must have” rather than a “nice to have”.

  • Headquarters in US & Canada: The past two years have drastically changed the way we invest. While historically we’ve been focused on companies in Northeast major markets (largely NY, Boston, Philly, and DC), we have adapted to running our investment process and supporting our portfolio companies largely remotely. For Fund III, we have broadened our aperture to include all of the US and Canada, with a particular interest in regions that are historically underserved from a capital perspective. We also have the flexibility to deploy 20% of the fund’s capital internationally beyond the US & Canada, allowing us to take on opportunities beyond our more traditional filters.

• Alignment with Laconia’s strengths

  • Core team expertise: We stick to what we’re good at. While there are many investors looking at B2B software, we specialize in this, bringing deep expertise in B2B sales, marketing, and business development that moves the needle on getting seed startups to Series A and beyond.

  • Network value: Our LP relationships and extended networks are a strong fit for B2B as well, enabling us to open doors to customer intros as soon as we dive into due diligence.

We hope this overview provides some insight into our thinking. Next up, we’ll dive into the entrepreneur profile we seek. Until then, let us know if you have any feedback here or on Twitter — @jsilverman22, @djarcara, @geri_kirilova, @JailwalaReena.