Investor and General Partner at Progression Fund
Progression Fund is a venture capital firm focusing in consumer startups. They've invested in companies like Luma, OK Play, and Dapper Labs.
I started off as an engineer in the aerospace and defense industry. I was building a lot in the space, and then I got transferred to the defense side. I was basically making weapons in my career. At first I wanted to be an engineer because I was interested in going to space.
When I realized that there was so much red tape, didn't align with me ethically what I wanted to do, I applied to business school after five and a half years in engineering. And I also applied to a startup because startups are known for not working with a lot of red tape, moving fast. I actually got into that startup and they were a Series A startup at the time that became a series B startup overnight. It was called the Rubicon project. I got a chance to work with the CEO, COO, and they were a venture backed company.
I didn't know what venture was. Some of the leaders introduced me to some venture capitalists. I went into business school thinking I wanted to be like a management consultant. Having that startup experience actually led me to work in my first venture capital. It was to consult for a corporate venture fund in a media technology sector.
Fast forward to 2020, my partner, Matt founded Progression with the people that started Musically. I'd been co-investing with Matt at his previous venture fund. That's how I got into Progression.
I did work for a media tech firm and then I started the corporate venture fund I worked for. They did a lot of the VFX, it was called Technicolor. So that's how I got to understand more about the consumer side of things. And we were investing in both enterprise and consumer at the corporate fund.
Also, I got a lot of consumer experience because they were developing games, like Dragon Ball Z and some others. They were one of the first mobile game developers, so I got to understand from those two different perspectives about the consumer and also through the investing practice.
In terms of what helps me with my job and investing, I can talk to engineers, good solid foundations and analytics, and just math in general, which goes a long way for venture.
At my last corporate fund, we invested in a media company called Donut Media. The tech industry in general they kind of shy away from media and gaming. And lately gaming has been an interesting asset class to pursue, but it wasn't the case back in like 2017, 2018.
The founder was very impressive. He was one of the best operators I'd ever met. The company itself was essentially one of the more popular YouTube channels. That company exited. It made very decent money. And I had wished we actually put more money into the company. But at the time when we were doing diligence on it, everyone's like, Oh, it's not a tech company.
But I always thought the founder knew his stuff. He sent really great updates. He knew how to get to profitability. He knew how to make content very cheaply and how to build an audience. He was just a great operator and that ended up being a very good outcome for the early investors.
As an investor, you have to be careful about these trends. And the biggest sign of things being overly inflated is price and price discipline. When you start seeing really smart investors who are known for being disciplined with price start saying things like things are too expensive, that's when you start thinking this could be at a hype cycle.
Mike Maples at Floodgate is very good. The way he thinks about seed investing, he's very principled in what he looks for. And he looks for contrarian things. The other person's Bill Gurley. They both look things that are actually happening in the world right now. But the, the general population fails, recognize it as a real trend. It's almost like they see the future is actually really happening now. And they seem to capitalize that and find the right founders and to put money, but behind those people. And invest in their vision and bring that to life.
Being able to back and see people building their life's work. It's an honor to talk to a lot of founders and to see what they're building, especially if it is their mission, as they get to share that with you. You got to love that part of the job to want to do it every day. The second thing is, there's like nothing like seeing a small startup actually starting to work, and start enabling a lot of jobs, putting food on the table for other families. The dopamine hit from that is really cool to see. That's why founders out there should be sending investor updates regularly because those things keep us motivated to to know what's going on and to help you. And the third thing is, seeing the positive updates and saying that you had a hand in it.
I didn't expect how hard it was to actually see the failures because you put so much time, money, and energy. Unfortunately, that's what you sign up for VC. It's not the asset class where this thing is going to return capital a certain amount and it's predictable. I didn't expect the heartache would come along with it. I know. And I know it's just a job, but a lot of it's part of your identity. You're in it with these founders. You put so much into it to be alongside with them that you feel bad when things don't work out. I didn't expect that to be really challenging.
That's one thing. In terms of firm building, I've realized that this is a sales job. At the end of the day, you're either selling your firm to a potential LP, or you're selling your firm to a startup. You have to be good at crafting cold emails to reach out to people and network and do things like that. It's not that great of a job. You just sell something.
You have to do three things really good as a VC. You have to be able to source deals and get to be able to pick the right and invest correctly. And you also have to be able to fundraise. All of those things require you to be a pretty good salesman.
At Progression we see somewhere 1500, in other years we've seen 2000. We get a ton of inbound. There's no process to it. Be out there and be open for business to give away money and you'll source that way. Can't say that's the highest quality.
The other way is, working with other VCs, getting to know VCs, doing your catch ups quarterly, monthly, weekly, building a network of people that are also investors who will pass you deals. We get a great amount of deal flow then. We programmatically make sure that we're catching up with people regularly, that, that we get good sources of deal flow from experts and some operators.
We try to keep top of mind as a fund with our newsletters, events, doing podcasts, doing things like this. A lot of the time we'll get referrals from our operators or from portfolio companies that we've worked with.
And the other way is we also do cold outreach. We hear about a company and we see articles or we see things posted on LinkedIn or we see stuff on Twitter, and I will write a well crafted email or a DM to get a 30 minute meeting with them.
We have said that we don't like solo founders, but that's not true because we've broken our own rules so many times. I can tell you that it depends. In general, what you do see with solo founders is that there's no risk of a founder team breakup that can kill a company. But on the flip side, this founder probably doesn't have all the requisite skills that we like to see in a founding team to go build a huge company. It is a hard thing to do, being all in on something by yourself without anyone to bounce ideas off of or to go through the ups and downs with. I'd say that we do invest in solo founders, but just recognize that's going to be a risk. And investors will look at it that way.
We like founders who know how to build product and we like founders who know how to sell. It's not typically the same person. In terms of startups, we like to see something that's a little bit anomalous, but obvious. The other thing we like to see is founders who have shown that they could hire good and retain talent.
Not every company is venture backable. You have to be able to be a big company such that it could return that venture capital fund. More stable type of business, like real estate play or something that seems more private equity, doesn't require VC and maybe can't produce a VC outcome.
If we're speaking in generalities here, it's more of a technology play and something that's scalable. Something that could be scaled in software and something that has high network effects. And that means I get more value as I introduce this platform to other people. It becomes bigger because the eyeballs get bigger and advertisers can import lots of money. That's a venture backable business.
If you want to get into venture, it's important that you've got a network of founders. Start by building your network of startups and entrepreneurs. I see a lot of the recruiting process now in venture being like, show me six startups that you would have invested in, write me a memo for a few of those and tell me why. And also introduce us to that founder. Just because you're smart, you're Ivy league and whatever, it doesn't mean that you could get a job at venture because you still have to demonstrate that you could build a network in the venture ecosystem.
Assuming they have a product already and there's maybe some traction, if there's not, build a product that you can demo. For fundraising, it is a bit of an art and channel matters.
We see thousands of companies, and we get a lot of very bad emails. I'm reading this long paragraph. I don't even know what the company does, but they're already asking for money and telling me what a minimum investment amount would look like for even to have a conversation with them. Don't do that. That does not help. What will help you is if you talk to some of angel investors in your network. If you don't have one, go find someone on LinkedIn. Being a good sales person, be able to craft a really good cold email or find a really good source for the introduction really matters if you want to kickstart your fundraise.
And the other piece of advice is have a pitch deck that's ready to go. And make sure you have some peers look at it. Other founders and other friendly investors that you're okay with getting really critical feedback from.
Consumer is hard because one, consumer preferences change. As an investor, when you're looking at market size, you can say it's too small, or this is not a real trend. But you look at a company like Uber for example, I remember so many smart people saying that the taxi business was a $5 billion market size. And that was it. But Uber's market cap alone surpasses that.
A new technology or service can change how the consumer habits are formed, that is what makes consumer really hard from both an investor standpoint and from a founder standpoint. Sometimes, what you're building probably looks dumb, Airbnb, for example, sounds like a really bad idea. Yeah, let a stranger in your house and they'll pay you. Consumers will be met with a ton of skepticism from VCs.
When we talk about consumer apps, a lot of VCs pass because there's just no traction or there's no retention on the app, meaning people are not coming back to it. It's really hard to form something sticky for consumer. And when you have something that's sticky and that's resonating and growing, that's when investors really want to take a look. And even so they still pass because they don't know if that's sustained.
As a founder, the ways you can mitigate those things, if you're a mission driven founder, if you've got a great team. VCs will have to put money to work and the way we can de-risk that is by just finding the best teams and people who are really mission driven, and this is their life's work and they're really good at recruiting people. This doesn't sound like the best business now, but can we believe this will be a really good business in the future? That is how you get money.
There's a lot of good companies we've passed on throughout my career. Masterclass was a company that we passed on that's doing well right now. What I learned is that founder overcame a lot of obstacles. He has a speech impediment. What this guy has been able to achieve in his life, even before starting the company. People who have a really good track record, despite difficulties and can overcome that. That's super important. And that's a really great sign that they've got tenacity and they're resilient.
The other thing is, finding an obvious company, but why no one else is investing. If you have conviction as an investor, it's a good idea to probably invest. Maybe you help get them financing if they don't have a lead investor.
The other thing I would mention is be nice to everyone you meet and help out if you can.
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