Through the Looking Glass: Carlos Miguel Gutierrez

Carlos Miguel Gutierrez is the Founder and CEO of Highline Point Group, LLC, a strategic advisory firm based in New York City. An investor and advocate for entrepreneurship, he is also a Managing Director of Golden Seeds, one of the nation’s most active early stage investment firms. Carlos also serves as the Executive Director of the Ignite Institute at Saint Peter’s University, which focuses on fostering entrepreneurship. He is a contributor to The Huffington Post, The Times of Israel, Asia Times, and The Jerusalem Post. His writing has also been featured by CNBC, Univision, and El Pais. You can follow Carlos on Twitter @cmgutierrezjr.

I'd love to start with a little bit of your background and how that led you to the world of early-stage startups.

I've had experience in various Industries: politics, government, international development, government affairs. I'm a lawyer by training and I also went to grad school for business leadership. All of these things helped me when I decided to really get into investing. 

I was always interested in public companies. But as you know, investing in public companies is very passive.

I had the opportunity to make my first angel investment a few years back, and I realized I could really be more hands-on, almost like a part of the extended team of the company. I could use my background and network to help the company and really see myself adding value -- so I was hooked. It’s very interesting to work with people who are passionate and who have identified a solution to a big problem. I think just by osmosis, it makes you passionate. 

Can you talk a little bit about some of the roles you had within the venture ecosystem? 

I've been an advisor, a mentor, and an investor. I have gotten involved with various groups and organizations, not only to invest in Innovative companies and entrepreneurs, but also with a mission-driven approach that has a social impact. 

I was introduced to Golden Seeds a couple of years ago and was very impressed. Golden Seeds is the most active angel group investing in women-led companies in the United States, having invested over $110 million in women-led companies over the last 10 years. We all know about the funding gap that exists for women and minorities -- even geographically. So naturally there is a great opportunity there. I always tell people that yes, there's a social component to it, which is helping women who are not receiving funding anywhere near the levels of men. But the second part is that if you look at the data, women-led companies tend to perform better than those led by men, and diverse teams perform better than homogeneous ones. You can create a pretty strong investment thesis behind that. 

Through my work with Golden Seeds, I was introduced to Chloe Capital, an early stage VC firm that invests in women-led founders and diverse teams by ethnicity, gender, and geography. They’re an extremely passionate team, so I’m very glad to be able to lend my insight to that mission as an advisor.

I’ve also invested as an angel across various verticals, including cybersecurity, ed-tech, financial services, entertainment, and retail-technology among others. Additionally, I’m a mentor with the Stanford Latino Entrepreneurship Initiative, a program that helps Hispanic & Latino entrepreneurs learn about scaling their businesses.

I really enjoy being around entrepreneurs. 

When making investments, are you mission-oriented or financially driven? 

A little bit of both. I'm industry agnostic, and like any investor, I’m looking for businesses that have the potential to grow to be very big. I’m not focused on any particular market. 

Yet, within that basic thesis, I am also looking for underrepresented founders, who by the way are just as good as everyone else; but who are not receiving the attention that they should be, or they don’t have access to networks or mechanisms that will allow them to go out and raise funds. 

With that said, there are many opportunities within specific segments. For example, there are businesses targeting certain demographics that may perhaps only come from a demographic that understands that need. That’s where, as an investor, you have to keep an open mind, because there have been many great opportunities that have been passed on by investors because they lacked that open mind. If you look at Spanx, the founder had a tough time convincing male VCs about the product, and those who didn’t invest missed out on an amazing story. 

One thing that you mentioned that keeps me up at night is access. So much of the traditional venture landscape is premised on raising friends, family, and angel money in order to build traction, reputation, and network to then raise venture capital. Especially with underrepresented demographics, this track becomes increasingly challenging, especially on a socio-economic basis. Do you think there has been any sort of structural solution to this challenge of getting ‘inception’ capital, and has it changed over time? 

I do think that never before has there been so much attention placed on the problem. Everyone is talking about it. From a structural perspective, I think that there are more VC funds and angel investors who are specifically looking to be the very early stage investors in companies that are founded by entrepreneurs of backgrounds that are typically underrepresented. So there is a lot of activity.

Yet, at the same time, it is a little bit disappointing when you see how much activity there is, and then you see the data, and you’re like, ‘Wow, we barely made a dent’. So, there's definitely a disconnect there. Going back to your question, often times, you might hear investors ask an entrepreneur, “Who’s invested in your company? Have your friends and family invested?” Some investors consider that your friends and family know you best, and if you can’t convince them to give you money, then, something’s not right there and they might move on.

The problem with looking at it that way is that, as you mentioned, not only are you missing out on a potential opportunity, but you're also ignoring socio-economic realities. Not every entrepreneur has access to friends and family that can fund their company. 

So, I think that requires a shift in thinking. I think there are people --  both angel investors and firms -- that understand the reality of the underfunding gap, and they’re looking at it differently. One change that’s taking place -- and will take a few more years to reach a critical mass -- is increased diversity in investors -- not only in angel investors and LPs, but also in venture capital fund investors who bring a different perspective and mindset. But as I mentioned, it does still appear from the data that there's a lot of work that needs to be done.

Also, founders to a certain extent are very important in this discussion. For example, I've spoken to founders who say that they wanted to talk to Golden Seeds because they want women investors because they don't want all their investors to all fit one certain profile. 

And, then there's also pressure even just from society. You see that across all Industries, whether it’s changes to representation or to pay. A societal shift is going on, and we're all putting pressure to create positive change. 

I’m really interested to see how the dynamic will change from the LP level and whether there will be pressure from institutional investors, fund-of-funds managers, even high net worth individuals who are making investments into funds, and whether this topic is going to become a priority for them. What's your experience been with that from an LP perspective? Is this something that's picking up momentum?

I think the rise and success of funds investing in underrepresented entrepreneurs is indicative of the desire of LPs to invest in those companies. The conversation does come up more, and I think it goes back to what I mentioned earlier -- not just from a societal perspective, but also in terms of the recognition that there is a thesis behind investing in underrepresented founders. 

I think the signs are positive from all angles, moving in the right direction. It’s incremental and it's going to take time, but I think the industry is moving in the direction of better representation. 

How do you think about your different investor roles, as an LP, a fund manager, and an angel investor? What are the benefits of the different structures/vehicles for you personally?  

One very basic answer is just for the sake of diversifying. As you know, it’s very risky to invest in early stage companies. The risk of failure is very high. In terms of diversification, I think it makes a lot of sense to invest as an LP in funds that have greater resources than you do as an individual, not only to conduct due diligence but to be able to source deals and cast a wider net in building a portfolio. 

In terms of being an angel, it's very rewarding. To do your due diligence, go through the process, meet an entrepreneur, learn about what they're passionate about, and be able to say ‘I can be helpful’. So if I meet companies where I don't understand the industry or have a background/network that can be helpful, then it's not as exciting or interesting for me because I can't really add a lot of value. I like to be able to help when/where I can, which is what entrepreneurs are looking for as well -- they want strategic value beyond just writing a check. 

Both methods are great ways to get exposure into a very exciting asset class. 

What advice do you have for people who do not typically have experience with a start-up or even with technology necessarily, but are looking to gain exposure to the VC industry, which can be very daunting and insular from the outside looking in?

If you’re interested in learning about venture, start going to events. Start going to pitch events, demo days, panels -- there are so many activities where you can just go and learn not only about the industry, but also the language and terms used in the industry. Over time, when you're involved in venture capital or angel investing, there are things that you learn from being involved and gaining experience. You can read a book, but it's not the same. So I would say number one is to just get involved and seek out opportunities where you can be around people who know the industry, gain that entry level knowledge, and start networking. 

Beyond that, I think joining an angel group is a great way to learn about investing. In my case, I had my own due diligence process that I had learned on my own. Golden Seeds has a very institutionalized due diligence process and I learned a framework that I could place on top of my own framework when I invest. Also, in an angel group, you're surrounded by other individuals who have broad experience across various Industries and verticals, and it's helpful to hear how other people are thinking about companies and what questions they’re asking. This expands how you would assess a potential opportunity.

It’s also a little bit tough if you're just entering the investing world, looking for deals and sourcing deals by yourself. It helps to have an angel group that not only sources but also screens deals, so you look at companies that are at a certain stage, have been derisked a little bit, and have been evaluated by people who  know what they’re doing. That way, you don’t have to go out there and invest blindly.

Portfolio Spotlight

Emerging Venture: Beyond The Headlines

To many, venture capital is what is seen in the headlines - unicorns, mega-funds, runaway valuations, and hoodie-clad tech-titans cruising the Valley on scooters. But at its very core, venture capital could not be further from this image. Venture is where capital meets innovation, primarily outside of the headlines, touching every corner of our personal and professional lives: how we eat, communicate, exercise, commute, work, and travel. This makes it a critical asset class for investors with long-term investment horizons, but it also demands deliberate strategy, structure, and process to properly allocate capital and manage risk.  

Not every venture deal, however, results in a blockbuster $1B+ IPO. The reality is actually quite to the contrary. Over 90% of 2018 exits came via M&A transactions, of which 83% were sub-$500M [1]. This suggests a deep opportunity set of “sub-unicorns”, putting smaller funds and often, emerging venture managers, at the forefront of the innovation curve and enabling them to stealthily deliver outsized alpha to those who wish to look for opportunities between the cracks in this vital but often fragmented and opaque asset class.   

Emerging venture firms, though perhaps not yet household names, are doing the digging and nimbly deploying smaller pools of capital while leveraging strategy, structure, and process to create value through hands-on engagement with entrepreneurs. Data shows this grassroots approach is generating attractive returns relative to larger funds and more established brands. In a recent study completed by Canadian Technology Accelerator, top-quartile venture funds <$249M generated IRR of 39% versus IRR of 33.6% ($250M-$999M funds) and 9.9% ($1B+ funds) [2]. This engaged approach is fully aligned, free enterprise innovation in its purest form. It is also miles away from spray and pray methodology and underscores the criticality of manager selection in the venture asset class.  

At Laconia, we live on the outskirts of the land of unicorns (though we are certainly happy to identify one!) where there may not be headlines, but there is exciting opportunity for those willing and able to do the hard work. The moral of the story is there is a land not terribly far away, just on the other side of the forest, inhabited by innovative sub-unicorns that are generating venture returns beyond the headlines. Choose an able guide to help you find the way – you will be glad to have taken the road less traveled.  

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[1] Data provided by Pitchbook and the National Venture Capital Associations’ “Venture Monitor”. Data as of 12/31/2018.

[2] Data parameters: 951 venture capital funds, Based in the US and Canada, FY2002 – 2014. Study conducted by the Canadian Trade Accelerator (2019) ctaconnects.com/emerging.

Portfolio Spotlight: Wethos

We are thrilled to announce that we’ve led a $3 million seed round in Wethos!

Wethos curates innovative teams of marketing specialists to work with meaningful brands. Wethos doesn’t neatly fit into any single investment category - Instead, it’s what you’d get if a network, managed marketplace, and future of work platform had a futuristic baby. This atypical model is one of the keys to Wethos’ momentum and traction in the market. 

By delivering on the promise of curating the right people for every project in a compelling time frame and price bracket, Wethos’ offering exceeds that of traditional solutions by an order of magnitude. At the same time, Wethos provides freelancers with an alternative to the lonely, uncertain, and “race to the bottom” reality of most independent work. By enabling users to find work they actually care about, removing the burden of administrative work management, and always putting freelancers’ rights at the forefront, Wethos repairs the broken trust of the gig economy and, as one of their specialists aptly said, creates “what freelance work was actually meant to be”.

No one is better equipped to tackle this opportunity than the Wethos team. They have remained uncompromising on both building a better world for freelancers while simultaneously tackling the highest pain points in the market, and we can’t wait to see them embark on this next stage.

We were initially introduced to Rachel by Mike MacCombie two years ago (thanks again, Mike!). At the time, Wethos was still in the earlier stages of building its bench of freelance specialists, with a focus on matching individuals to projects. Because of the b2c-esque nature of freelance community-building, the company was not a fit for Laconia’s b2b SaaS-focused investment strategy at the time. Still, we had no doubts about Rachel’s focus, passion, and inevitable success. Over the next two years, we stayed in touch, regularly meeting for working sessions, catching up more casually, and collaborating on tech/VC community events. 

Fast forward to our latest catch-up this past February. Wethos had built a community of 4,000+ freelance specialists, in large part cracking the chicken-or-egg problem that b2b/b2c companies often have. They had launched dozens of teams for leading organizations after having successfully navigated a major business model pivot, all while building out a formidable distributed team and figuring out how to scalably create, launch, and manage curated teams in a new and unique way. As we dove into the mechanics of the business, I was blown away by the level of detailed thought in every component. So it was no surprise that when Rachel asked, “Which funds do you recommend we talk to about this round?”, my answer was 🙋‍.

After Rachel got the rest of our team up to speed (they were stoked as well!), we dove right into our due diligence process, which got us even more excited about the company for multiple reasons. One of the core components of our due diligence process is introducing companies to 6-12 prospective customers in order to gauge market demand, value proposition strength, differentiation, and our ability to add value by opening doors, all while simultaneously generating sales leads for the company. With Wethos, we received resoundingly positive feedback, with about half of the organizations immediately moving forward with the process to hire Wethos teams. This conviction was echoed by Wethos’ existing customers and freelancers, who highlighted the exceptional quality of the specialists and Wethos’ seamless workflows as the main selling points.

We’ve found that how companies handle due diligence is often strongly correlated with how they run their business. We often see CEOs paralyzed during fundraising due to the bandwidth drain, but Rachel had everything ready to go and seamlessly collaborated with her team throughout the whole process. This delegation, responsiveness, and thoroughness were strong signals of the Wethos team’s high level of trust and efficiency. Our impression of this team dynamic was cemented by the group meeting we had with co-founders Rachel, Kristen, and Claire. The three of them demonstrated a deep mutual respect, complementary skills, individual adaptability within their evolving roles, and an unwavering shared vision for the company.

As with all of our investments, we worked in partnership with the founders to identify a strong co-investor group for this round. We couldn’t be more excited to be working with ValueStream Ventures, Loup Ventures, and Overton, among others, as well as existing investors including Flybridge and BBV.

We could go on for days about the massive market opportunity, innovative structure, and many other things that excite us about this company -- but instead we’ll leave you to check out some of their incredible work, follow them to stay posted in real time, and explore opportunities to join them as a specialist, customer, or teammate. 

For more on their latest fundraise, visit their blog.

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.