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.