All Perspectives 2019

Portfolio Spotlight: PromoteIQ

We are thrilled to announce today that our portfolio company, PromoteIQ, has been acquired by Microsoft!


PromoteIQ automates vendor marketing for e-commerce. Their platform enables brands to promote their products on e-commerce sites, increasing brand awareness, driving incremental product sales and generating unprecedented product performance insight. For retailers, vendor marketing is quickly becoming a strategic business line and critical source of incremental margin. Today, PromoteIQ's technology powers the core vendor marketing programs for the largest online retailers and brands, and we couldn’t imagine a better partner for the next stage of PromoteIQ’s growth than Microsoft.


In August of 2016, Alex Sherman and Peter Schwartz, the co-founders of PromoteIQ, walked into our office after being introduced to us by another founder in our Laconia family, Liz Zalman (Co-founder & CEO, @strongDM).


Investing in PromoteIQ wasn’t an immediately obvious decision. Though we had a number of exciting adtech investments in our legacy portfolio (TripleLift, C3 Metrics, FreeWheel, Localytics, to name a few), our fund focus had shifted away from the sector as it became increasingly tough to navigate for both entrepreneurs and investors alike. The space had become oversaturated with investment, and obtaining fresh capital and/or liquidity was proving to be difficult. 


Any reservations we had about the sector quickly disappeared as Alex and Peter presented a clear articulation of PromoteIQ as building an entirely new category at the forefront of the "Digital Shelf". At the time, vendor marketing had not yet gained serious momentum; even Amazon's now multi-billion-dollar advertising business was mostly under the radar. Alex and Peter cleanly outlined the tremendous growth opportunity in this new category at the intersection of marketing and commerce. PromoteIQ's platform enabled e-commerce sites to create another revenue stream and allowed brands to promote themselves to shoppers at the critical moment of conversion in their purchasing pathway.


Confident and grounded entrepreneurs, Alex and Peter possessed a clear vision of the market opportunity and the potential challenges ahead. They were also fully versed in the metrics and milestones needed to drive the business and reach the next stage of company growth. We felt a strong sense of 'fit' - these were entrepreneurs that we wanted to work with.


We introduced Alex and Peter to Nauta Capital and co-led their seed round. Over the last thirty months, we have had the honor of working closely with them on opening doors at key enterprise clients, fine-tuning strategy, helping them find some star hires (including our very own former intern Reena!), and everything in between. Their business has grown at breathtaking speed and in a short period of time, the company has become the dominant player within their category, easily outmaneuvering some of their larger competitors to build the defining solution for retailers.


We are so proud of Alex, Peter, and the entire team for building and establishing the company as a leading global vendor marketing platform -- no small feat by any means. From board meetings to late night phone calls and summer retreats, we have learned a great deal from them as investors, partners, and friends -- and who knew they would help us find love and tranquility in fishing? We can’t wait to see them expand their global presence through their continued growth with Microsoft’s powerhouse behind them.


You can read more on the acquisition here and here.

Portfolio Spotlight: Ocrolus

We are very excited to announce the closing of Ocrolus’s $24 million Series B financing led by Oak HC/FT with follow-on support by Laconia, Bullpen Capital,  QED Investors, ValueStream Ventures, and Differential Ventures. We were introduced to Ocrolus in the summer of 2017 by Nick Adams of Differential Ventures. Ocrolus is a New York City-based fintech infrastructure platform that automates the analysis of digital documents and financial data. By eliminating manual review, Ocrolus empowers companies to reinvest their human capital and automate processes with industry-leading speed and accuracy. Ocrolus services hundreds of customers in the financial sector and analyzes millions of transactions every day with 99+% accuracy. 


The company was in our sweet spot from the moment we met their CEO, Sam Bobley. It had been seed funded primarily by friends and family, allowing Sam to build a strong founding team with a product solving a large TAM manual workflow problem. When Sam first sat down with us, he was looking to raise $750K. His pitch was very compelling about digitizing what heretofore was a high pain point manual workflow: the processing of financial services applications.  Ocrolus was a big idea and it quickly became apparent to us that a much larger capital raise was needed.  


Sam and Vik were very responsive and transparent throughout the due diligence process. Diving into everything from the company's financing history to their plans for improving unit economics to even introducing us to Sam's father, an entrepreneur himself & a trusted advisor to Ocrolus, we felt we were building a true partnership with the team. Our collaborative inclinations have few boundaries!


Sam had raised a fair amount of seed capital, so his cap table had unusual complexity to it. We rolled up our sleeves, sifted through the company's finances, and came up with a structure that would permit increasing the initial $750K Sam sought to a proposed $3M-$4M round. Indeed, over the next few months, a first class group of syndication partners concluded Ocrolus’s $4M financing in January of last year. 


It was then off to the races. Ocrolus’s rapid year-to-year revenue growth has been sensational.  Sam, Vik, and the team have built a product that checks all of the boxes: strong market fit, sound tech, tremendous scalability. They are also amongst the most intense and driven leaders we have encountered. They actively solicit and listen to all of their investors and then are quickly decisive once the facts and opinions have been satisfactorily gathered. They are also very loyal, always making sure their investors and employees are respected in any decision being made. 


Sam and Vik embody the Laconia DNA. Congratulations to them and their entire team!

For more details, see their feature in Venturebeat.



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!