All Perspectives 2019

Laconia Turns Four!

We were once told that 1 year in the early stage startup world is like 20 years in human years -- if that is true, then we are celebrating our 80th birthday. At 80, we decided it was time for a face lift.

Let’s back up…

Four years ago, David and I started Laconia to better support the next generation of entrepreneurs by taking the best practices of angel investing and the best practices of institutional venture capital to build the fund we always wanted to have as founders. We wanted to leverage our operational experience and our network to build an ecosystem that provides entrepreneurs with value and guidance beyond cash investment.  

Transparency. Community. Collaboration.

These were the core values that we built our vision on, and they continue to be the backbone of Laconia today.

From our open-door policy for mentor meetings to our first full-day venture symposium for 20+ family offices and our intensive, year-round paid internship program, education has been fundamental to increasing transparency across our sliver of the venture ecosystem.

Laconia is a family. Everyone, whether an entrepreneur, a Limited Partner, or a VC co-investor, plays an integral role in the success of our portfolio companies. As we build infrastructure around sales acceleration, operational execution, and capital strategy, we continue to proactively engage our whole community. Our north star, as always, is to support founders as they embark on the most difficult of journeys - entrepreneurship.

As our vision evolves, we realized it made sense to give our company a makeover that fully reflects our core DNA, starting with our logo:

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We set out to not only change the top coat of paint but better communicate the foundational elements that embody Laconia - community, collaboration, connectedness, support and guidance.

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Perhaps most significantly, we’ve revamped our website to further increase our accessibility through a pitch submission form, an open rolling intern application, and better organized resources.

Beyond the logo, website, and brand identity, we are launching a number of new initiatives, including a forum for founders to meet and discuss business challenges alongside fellow VCs, content series that further demystify venture and entrepreneurship, and curated community events.

When we started Laconia, it was just David and me in a room. As a full team of six, we can’t wait to see what the next chapter holds.

Thank you to Daniel Stankus for patiently understanding and capturing who we are, Adam Price & the Homer Logistics team for sharing your in-house genius with us, Bani Singh and Jake Quan for the heavy lifting on the website, Dessy Levinson for the thoughtful early support, Alex Sherman for calling our baby ugly and pushing us to prioritize this project and the team at ListenFirst for being the best officemates we could ask for since day one.

Founder Resources

Since starting our Mentor Meetings program two years ago, we’ve met hundreds of founders at various stages of their growth trajectory who have unanswered questions about how to raise capital, scale their organizations, and beyond. Through these meetings, we’ve found some key themes repeat consistently. Keeping in mind that founders always know their businesses best and that all advice should be taken with a grain of salt, we’ve put together a list of resources on best practices for key functional areas. We look forward to building upon this resource pool over time. Please let us know if we’re missing one of your must-reads!

Fundraising

Everything You Need To Know About Angel Investors by Denise Stephan (Crunchbase)

“They may invest as early as when a business is merely a concept, or after the company has proven to have some traction.”

How to Design a Pitch Deck: Lessons from a Seasoned Founder by Daniel Eckler (Mylo)

“Successful startups are known for their disruptive approach, so it’s interesting to see how so many innovative companies are surprisingly conservative (and sometimes sloppy) when it comes to their pitch deck .”

How Much Should You Raise in Your VC Round? And What is a VC Looking at in Your Model? By Mark Suster (Upfront Ventures)

“There are many things a VC is looking for in reviewing your business plan but beyond things the like the quality of revenue, margins, OPEX and CAPEX there’s a really simple rule I call, ‘Cash In, Cash Out, Milestones Achieved.’”

How to Raise a Seed Round by Geoff Ralston (Y Combinator)

“This brief guide is a summary of what startup founders need to know about raising the seed funds critical to getting their company off the ground.”

9 Seed Funding Gotchas by Alex Iskold (2048 Ventures)

“So how do you actually win this and get funding? Two things – preparation and traction.”

The Hackers Guide to Startup Fundraising by Fletcher Richman (Galvanized)

“I’ll walk you through my process to remove repetition and get you in more meetings with investors.”

The Top 3 Things Investors Are Looking for in SaaS Startups by Cristoph Janz (Point Nine Capital)

“Good revenue growth is worthless if the company gets huge adoption initially but doesn’t drive fundamental change.”

7 Tips for Raising Capital in a Slower Market by Alex Iskold (2048 Ventures)

“Even when capital is readily available, fundraising is still not easy.”

To Raise a Venture Round These Days, You Need To Be a Little Crazy by Hunter Walk (Homebrew)

“If your numbers are solid but not CRAZY, you definitely need a CRAZY vision.”

8 Things That Make Investors Cringe by Lili Balford (Ateliers Advisors)

“Have you ever left a pitch and wondered what investors really thought about you? I decided to roll up my sleeves and conduct a nationwide, sector and stage agnostic survey of investors.”

Why Maximizing Your Valuation May be Minimizing Your Chance for Success by Micah Baldwin (Madrona Venture Group)

“There are two schools in setting initial valuation: Maximize and Optimize.”

A Question About Risk That Founders Forget to Ask VCs by Hunter Walk (Homebrew)

“Potentially the best founder <> fund matches come when both parties are clear about what needs to still be proven out”

Sales

Optimize Your Funnel By Getting Inside Your Buyer’s Head by David Skok (Matrix Partners)

I discuss how to design a great sales process, analyze the buyers’ journey, and shorten the time to customer conversion from trials, freemium and open source products

Clarity of Message: Why You Need A Great Message & How To Create It by David Skok, Mike Troiano (Matrix Partners)

“This post focuses on how to get messaging and positioning right in the early stages of your company.”

SaaS Sales Compensation: How to Design the Right Plan by David Skok (Matrix Partners)

“In this blog post we will explore how to design sales compensation plans that help drive the right behaviors.”

Everything You Need to Know About Buyer Personas by Patrick Campbell (Profitwell)

“Quantified buyer personas are rich with data to help you make important pricing and marketing strategy decisions.”

7 “Easy” Ways to Increase Sales by Jason Lemkin (SaaStr)

“Stop acting “cheaper,''cuter, ''hipper.” Act more enterprise.”

How to choose the right SaaS sales model for my SaaS company by Sona Hovhannisyan (incredo)

“Choosing the right model can set your business in the success path and choosing the wrong model can leave your SaaS company with nothing.”

Management

Things You Must Know to Start A Business by Bill Green (Crunchbase)

“...building a startup is a game of endurance. It doesn’t happen overnight. The first 12-18 months come with a brutal learning curve most new founders struggle to make it through.”

Diversity & Inclusion at Early Stage Startups by Kat Manalac (Y Combinator)

“Diversity and inclusion initiatives can improve culture and reduce turnover (if done right).”

Diversity at Startups by Homebrew

“A company with people from different backgrounds, ages, genders, and perspectives can spark innovation. Innovation can lead to success.”

Managing Your Startup Board — A Short Presentation by Mark Suster (Upfront Ventures)

“Boards are organizations that need managing just as you would do for your management team.”

6 Ways Great Companies Use Board Decks to Their Advantage by Max Heald (Union Square Ventures)

“I quickly found out that there is no one standard board deck for a USV company (and in fact, we’re proud of that), but I did observe a few commonalities among the most effective decks.”

Front’s Mathilde Collin on Why Discipline Is More Important Than Vision, The Right Way To Approach Investor Updates and Director Reports & How To Effectively Structure 1-1s by Harry Stebbings, Mathilde Collin (The Twenty Minute VC)

“Success will happen only if you’re consistent.”

The 5 Step Process to Perfecting Your Product Launch Strategy by Patrick Campbell (Profitwell)

“It's critical to design a process that allows you to launch vastly different product experiences within specific communities so your product can reach critical mass.”

Metrics

16 Metrics You Must Keep an Eye On by Marc Andreessen

“Good metrics aren’t about raising money from VCs — they’re about running the business in a way where founders know how and why certain things are working (or not and can address or adjust accordingly.”

3 Metrics That Really Matter for Your Startup by The Muse

“While each start-up has its own unique metrics that are important, here are three categories that are almost universal.”

The Key Drivers for SaaS Success by David Skok (Matrix Partners)

“This slide deck offers a comprehensive and detailed look at the key metrics that are needed to understand and optimize a SaaS business, and how these can be used to drive SaaS success.”

What Does it Take to Raise Capital in SaaS in 2018? by Cristoph Janz (Point Nine Ventures)

“I thought about the question of ‘what does it take to raise capital in SaaS in 2016?’ and tried to give an answer that would fit on the proverbial back of a napkin..Now it’s time for the 2018 version.”

The Marketplace Funding Napkin 2018 by Julia Morrongiello (Point Nine Ventures)

“So what does it take to raise capital as a marketplace startup in 2018?”

Hiring

12 Tactics to Perfect your Interviewing Process by Dana Stalder (Matrix Partners)

“When it comes to effective, data-driven interviewing, it all starts with knowing who you are and what you want — and then taking a structured approach to find candidates that meet your criteria.”

Things Learned Hiring Replacement Co-op by Nicholas Parente (Underscore VC)

“I went back, reviewed my notes, and distilled 5 key takeaways that I learned while hiring my replacement at Underscore.”

How to Know if a Key Hire is an A or a B (or even a C) by Jason Lemkin (SaaStr)

“The biggest mistake you are probably going in your first year or two to make is hiring B or even C players for key director and VP positions.”

Be Careful Hiring CEOs, Architects, Game Devs, or Dualies by Jason Lemkin (SaaStr)

“I’ve learned again and again, including quite recently, there are 4 types of hires to just avoid”

How To Get Better at Recruiting. (We All Need To) by Jason Lemkin (SaaStr)

“Recruiting is tough. I certainly don’t do it well enough. But to be a great CEO, you need to find a way to force yourself to be a great recruiter.”

Ask a Female Engineer: Interviewing + Company Culture by Cadran Cowansage (Y Combinator)

“We’ve recruited a group of female engineers with years of industry experience to try an experiment with us called “Ask A Female Engineer.”

How To Alter Your Hiring Practices To Increase Diversity by Maynard Webb (Forbes)

“If you build a culture where fit means people who expand who we are, then diversity will be germane to your future success.”

The Close: New Rules for Hiring Executive Candidates by Dana Stalder (Matrix Partners)

“The close is a critical part of a successful recruiting process”

Miscellaneous

500 startups

Andreessen Horowitz

Christopher Janz

Elizabeth Yin

First Round Review

Fred Wilson

Jason Lemkin

Mahesh Vellanki

Mark Suster

Matt Turck

Paul Graham

The Twenty Minute VC

Tomas Tunguz

Work-Bench

Y Combinator

Portfolio Spotlight: xtraCHEF

We are very excited to announce the closing of xtraCHEF’s $7.5 million Series A financing led by MVP Capital with follow-on support by Laconia and ValueStream Ventures. We were introduced to xtraCHEF about 2 years ago through Michael Moretti, Managing Director at Silicon Valley Bank, and were immediately impressed with Andy Schwartz, the company's CEO.  Andy possesses a confident sense of direction, all the attributes of an excellent listener, and unparalleled grit. He, along with his co-founder and CTO, Bhavik Patel, has created a strong team foundation for building a great company. We led their $3 million seed round and are excited to support the company in this next stage of growth.

As a refresher, xtraCHEF, based in Philadelphia, is an automated Accounts Payable and Cost Intelligence platform built specifically for the hospitality industry. They help restaurant operators save time and money by eliminating manual back-of-house tasks. xtraCHEF digitizes and archives invoices and vendor statements, extracts and analyzes line-item details, and provides this data to view, analyze, and share. With this full suite of cost management tools, xtraCHEF empowers hospitality operators to drive profitability, an increasingly critical mission in the highly competitive, low margin food service industry.

From our first meeting, Andy and Bhavik were open and candid about their company, including the fact that they were new to raising venture capital. We never felt that they were selling us in order to close the funding round. They impressively understood that good-fit investors are those who are willing to roll up their sleeves and support business planning. Yes, they were looking for capital, but they also wanted value-added investors with whom they could form a true partnership of success. They have executed this approach with all of their investors, including those in the new Series A round. That’s our kind of entrepreneur!

In addition to working with Andy on positioning xtraCHEF within the VC community, we also helped him communicate the expectations of taking on institutional capital to his initial angel investors. Angels often look upon VCs with skeptical eyes and need to be assured that they are still a welcome support group to the company and also flexible enough as to not impede a new round of financing. Part of this communication is to explain in detail the capital strategy and how it aligns with an operating plan to paint the vision and create excitement. Taking venture capital should put a company on a different, more accelerated growth trajectory than most business people are familiar with. This shift may bring unfamiliar operating risks and even capital structures to those investors. Managing past investors with respect and transparency is an important part of fundraising.

In tandem with solving a high pain point problem for their customers, the xtraCHEF team has executed with impressive capital efficiency. Bhavik has built an excellent India-based offshore development team, providing one of the best examples of in-house off-shoring we have encountered. Andy has also segmented his go-to-market strategy with precision, allowing him to rapidly build revenue without a large sales infrastructure. Of course, the new capital will leverage this foundation allowing for even greater market scale. Laconia has a strong bias for sales-oriented leaders, which Andy is to a very high degree.

Congratulations to Andy, Bhavik, and the entire xtraCHEF team on this newest achievement!


Highlights: Venture Education Symposium In Retrospect

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In 2018, we began hosting educational breakfast roundtables for family offices focused on the benefits and challenges of tackling the venture asset class with discipline and strategy. This event series revealed a strong demand for more in-depth educational content, leading us to embark on a full-day symposium to decode the asset class and make it more accessible.

Often when ambition meets reality, the results can be disastrous. So, on the morning of our inaugural Venture Education Symposium, the stakes were high. With name cards of 24 family offices carefully arranged, materials prepped, coffee & tea piping hot, and pastries on deck, we prepared to see which would win out – ambition or reality. By day’s end, after much engaged discussion and discovery, ambition indeed carried the day.   

Venture Within Asset Allocation | Professor Ian D’Souza

Venture Within Asset Allocation | Professor Ian D’Souza

Ian D’Souza, Adjunct Professor of Finance, NYU, kicked things off and laid a strong foundation for the day’s agenda, noting that venture is a “difficult asset class requiring skill, patience, and a bit of luck”. Skill and patience were the resounding themes of the morning session, which offered a deep-dive into due-diligence on venture funds and direct investments. Given the nature of private investments, and varying degrees of available information, doing the “homework” and leveraging experience and expertise were highlighted as critical to driving better investment decisions and outcomes in the venture asset class.

Strategy, structure, expertise, and deep due-diligence are key to this unique and challenging asset class

Entrepreneurs Roundtable

Entrepreneurs Roundtable

The afternoon session transitioned into a working lunch and an engaging panel, featuring a candid exchange with VC-backed entrepreneurs. Symposium attendees got a glimpse into the mind of an entrepreneur, their unique path, and what they deem important in building a business and fundraising. What was extraordinary – beyond the remarkable authenticity and candor on display – was the diversity of paths these entrepreneurs followed on their journeys and the common theme of the importance of people and teams coalescing around a shared vision.

Successful entrepreneurs recognize the value of teams coalescing around a shared vision

Tax Considerations When Venture Investing | CohnReznick

Tax Considerations When Venture Investing | CohnReznick

After lunch, the discussion shifted to the legal and tax complexities of the asset class - ranging from standard vs non-standard LP term negotiation to Section 1202 tax exclusion, which provides significant tax relief for entrepreneurs and angels. A NextGen panel offered insight into how next-gen family members are integrated into the existing family office, shedding light on emerging trends, learnings, and the connection between financial returns and measurable social impact.

Legal structure and appropriate tax planning to manage complexities inherent in venture require resident expertise or an adept service partner

Shark Tank: Three Minute Quickfire Pitches | Led by Quake Capital

Shark Tank: Three Minute Quickfire Pitches | Led by Quake Capital

With cocktails and canapes in sight, we capped off the day with a fun “Shark Tank” session. Founders delivered 3 minute mini-pitches, allowing the audience to put their newly acquired knowledge to the test and serve as judges.  

Venture is the front end of the innovation curve that provides insight into public markets and touches every part of our lives.  Investors endowed with the luxury of time have the latitude to include venture in their asset mix, and it should not be entered into lightly, but with eyes wide open. Strategy, structure, expertise, and deep due-diligence are key in decoding this unique asset class and collectively can position the investor to separate the wheat from the chaff.

Special thanks to our sponsors, @LowensteinLLP, @FirstRepublic, @CushWake, @i(x)invests, and @Clade_Co for their support in making this event possible.

Doubling Down: Sales Acceleration & Operational Execution

With the new year well under way, we’re eager to share some exciting developments on the horizon. In addition to fresh capital to deploy, 2018 brought us four new portfolio companies, numerous Laconia family get-togethers, and a brand new office (come visit!). Whether it’s on the fundraising, operations, or business development front, we look forward to continuing to open doors for our founders as our ecosystem grows.

As operators and entrepreneurs ourselves, we know that building an enduring company is no small feat. Beyond providing funding, we are focusing our efforts on increasing our accessibility, leveraging our experience, and building a supportive community to help you navigate the challenges of startup life. As always, we are all ears if anyone needs feedback or a shoulder to complain on.

In working with early stage companies for 9+ years now, we have found that revenue and operational guidance are the lifelines for early stage companies. As a result, we are doubling down on supporting companies with sales acceleration and operational execution. To bolster these efforts, we have invested in a number of tools that will enable us to better leverage our existing relationships, further expand our networks, and operationalize our business development initiatives as “Executives in Residence” for founders.

To increase our bandwidth on operations, we are excited to announce some team changes. Geri Kirilova’s promotion to Principal will allow her to take on a more investing-centric role and remain more readily available to our founders. As we continue to strengthen and build a support network, we’re also growing the Laconia family, bringing on Garry Duncan as our Managing Director of Market Development and Padma Rao as our Head of Community.

Garry brings a unique breadth of experience across capital markets, corporate banking, and institutional asset management. At Laconia, Garry will help build deep institutional relationships that support both Laconia and our portfolio companies.

With a background in business development and strategic communications in international development and tech, Padma will be developing Laconia’s communication and engagement infrastructure to meet our portfolio companies’ needs.

These team changes will provide us with additional bandwidth to help founders navigate the ups and downs of their entrepreneurial journeys, enabling us to increase our own “partner availability” and launch new events, content series, and community initiatives - more to come soon.

Though it’s a new year, our investment focus remains the same: pre-Series A b2b software companies headquartered in Northeast major markets. Within b2b, we are sector-agnostic, with a particular focus on companies that make existing markets or workflows more efficient. If you are a founder, investor, or industry executive working on the digitization of legacy industries, please don’t hesitate to reach out!