Mighty Capital's Jennifer Vancini on Product Driven Investing

Jennifer Vancini of Mighty Capital - Podcast Transcript

Singer:	So, when your troubles are mounting in tax or accounting, you go to Kruze Founders and Friends. It’s Kruze Consulting. Founders & Friends with your host, Scotty Orn.
Scott:	Welcome to Founders & Friends podcast. This is Scott Orn at Kruze Consulting. And before we get to our special guest, Jennifer Vancini at Mighty Capital, a quick shout out to Rippling. Rippling does payroll, benefits and integrates into your IT system to make it so that you can spin up new employees really quickly. It’s an awesome service. We love it at Kruze. We put a lot of clients on it. Check out Rippling. And now Jennifer Vancini from Mighty Capital. Welcome.
Jennifer:	Hi, good morning. Thank you, Scott.
Scott:	Thank you. So, we’ve been friends for a couple of years.
Jennifer:	A couple of years now. Yes.
Scott:	You work in venture capital?
Jennifer:	Mm-hmm (affirmative).
Scott:	Maybe you can kind of give your quick background and tell us a little bit about Mighty Capital.
Jennifer:	I don’t know if my background’s quick. So, I’m a founding partner, general partner at Mighty Capital. I got into investing several years ago. It’s been kind of a culmination of my experience in working with startups and business development and corporate development. At one point in my career I decided to leave the operational world, operational role and focus on investing because I have a finance background and I know that you have to diversify and that there needs to be some discipline around it if you actually don’t want to lose all your money. So, after doing that on my own for a bit managing family office fund, I was co-investing with some people through a networked group and a few of us decided to split off and form a fund in 2017 to be able to take advantage of better opportunities.
Scott:	That’s awesome. I didn’t know you worked for a family office before. That’s kind of-
Jennifer:	Right on my own actually.
Scott:	Oh, you did?
Jennifer:	Yeah. At the time I thought about bringing in other money.
Scott:	Yeah.
Jennifer:	Realized that would be way more headache on my own than it was worth. I don’t think single GP funds are always the best way to go. Right?
Scott:	Why? Because you need a little check on the decision making or-
Jennifer:	You need the check on the decision making. It’s lonely to work by yourself too quite honestly. These are very complicated situations oftentimes. And yes, you do need diversity of thought and perspective and experience.
Scott:	Yeah, that’s awesome. And so, the people that you started Mighty Capital with, you were co-investing as like angel investors together? How did you-
Jennifer:	Yeah, correct. Yeah, for a couple of years. So, my co-founding partners are SC Moatti, Sophie Charlotte Moatti, who’s the managing partner. Dr. Allan Kramer. And they both bring fantastic backgrounds. SC is a dyed in the wool product manager. Several experiences building great products in EA company that was bought by Facebook. She’s been on the board of Opera. She loves investing, working with startups and loves great product stories. Dr. Allan Kramer was a physician who left that world and was a founder of Bridge Bank.
Scott:	Oh, no way. Are you kidding me?
Jennifer:	Yeah. Yeah. So, he was on the board of Silicon Valley Bank for a while obviously. And he loves investing and he’s got a lot of strength on the life sciences proposals in particular.
Scott:	And Bridge Bank was a startup in itself.
Jennifer:	Right.
Scott:	And they did really well, too. So, they got bought out and everything.
Jennifer:	Yeah, they’ve done really well.
Scott:	That’s fantastic.
Jennifer:	Yeah. So, we all have our own experiences in investing in business operations. So, it was a really good mix.
Scott:	That’s really great.
Jennifer:	And we built a great group of limited partners, many of whom get very involved actually in the deals up front in exchange for co-investment rights. And they bring their specific expertise in sectors and in operational roles.
Scott:	So, you almost have like your LPs are also diligence providers.
Jennifer:	That can be, yeah. Yeah, we call them limited LPs. It’s ones who choose to go through a, we have an LPN residence program. So, we want them to observe how it works, get trained up. A lot of them simply want to learn more about investing as they think about that as part of their alternative investment strategy or even what they might want to do in five or 10 years. Some of them just love being in the game and have a lot to bring to the table.
Scott:	That’s cool.
Jennifer:	Yeah.
Scott:	And what’s like Mighty Capital’s core value-add or the stick? How do you position yourself in the market?
Jennifer:	Right. And there are so many places to get money now. Right? So, many venture capitalists, private equity funds, family offices, they all have to be differentiated and have a value add. Right? So, our thesis is that we invest in companies typically at an early growth stage that have great product cultures. So, we look for businesses that can create value at scale. Somewhere in the product stack where there’s a strength that is solving a hard problem with a team that has the ability to actually grow this company where there’s a big enough market for it to make sense. We look at all the things funds typically look at, we put a big emphasis though on why is this company going to succeed and grow value at scale? And are we aligned on the end game? You know, the exit.
Scott:	You used the word culture, which I’m like this is my first time ever running a company at Kruze Consulting. I used to be on the investing side. I don’t think I ever really appreciated how important culture is. Like when you’re actually running something.
Jennifer:	It’s becoming bigger than ever.
Scott:	Yeah.
Jennifer:	We have an annual offsite, we had one in September. We actually spend time talking about culture.
Scott:	Yeah.
Jennifer:	So, our LPs come to the offsite, right? We did some breakout sessions on what should our culture be and-
Scott:	Yeah.
Jennifer:	Have you ever heard of that in venture capital, where you’re pulling in your-
Scott:	Yeah.
Jennifer:	And talking about the culture.
Scott:	And that’s what is so cool about it. That’s why I latched onto it because it’s like-
Jennifer:	Yeah. Yeah. And investing as in any industry, each company has its own culture and we want to work and be in places where we’re aligned and agree on who we are and what’s important to us and how we operate. Right?
Scott:	Yeah. But I also feel like it’s so important and it also kind of helps maybe the matchmaking aspects.
Jennifer:	Exactly.
Scott:	With founders because you’re both-
Jennifer:	Exactly.
Scott:	Like if you’re articulating what your culture is and what you care about and what you’re looking for in investments, they can kind of self-select in or self-select out. And sometimes the self-select outs are actually like the best thing that could have ever happened to you as a VC. Right?
Jennifer:	Yeah. And it’s not unlike a startup.
Scott:	Yeah.
Jennifer:	It’s very much like that in terms of how you’re running an organization. And to be successful, the people and how you communicate and work together through the really tough times is super important.
Scott:	I think about our best companies like Comm, Superhuman and these companies. They have extremely strong cultures, but they’re positive.
Jennifer:	Right.
Scott:	But it helps you kind of guide the company and manage the company. It’s almost like an invisible hand pushing the company in certain directions.
Jennifer:	Yeah. It informs how people decide to behave.
Scott:	Yeah.
Jennifer:	You know? I was thinking about this recently because I gave a talk to a bunch of young women coming here from Miami University out of Ohio. Starting their careers, looking in entrepreneurial-ism. They’re like getting worried now. They’re about to jump off from their safe environments into the corporate world. They hear these horrible stories, right? As women especially, and we’re talking about, they wanted to know, what do I do if I get into a bad culture?
Scott:	Yeah.
Jennifer:	And my advice was in a good economy, you don’t have to put up with it. In a bad economy, you kind of fasten your seatbelt and figure out how to get the most out of the situation.
Scott:	Yeah.
Jennifer:	Do professional development. But I was thinking about culture and how each company has a different culture. And one key thing I found different in different companies is whether or not swearing is part of the cultural norm or not. Right? When I worked at Pricewaterhouse in Toronto, it was not part of the cultural norms. The people didn’t swear. I worked for another company where the expletives flew all the time and I started doing it. I started doing it more at home.
Scott:	It’s like a virus.
Jennifer:	So, culture is a conscious but also very unconscious force in how we decide to behave and be in an organization. And there is no right or wrong necessarily. It’s like what works for you and your team and what are your expected outcomes based on it.
Scott:	Yeah. I mean maybe the Oracle sales culture is like-
Jennifer:	Yeah.
Scott:	Tough but incredibly successful, right?
Jennifer:	Should be aggressive and tough, yeah.
Scott:	The people who sign up for that are, right? I just look at our clients and it’s like the ones that really take time to define this and kind of police it tends to be the best performing companies.
Jennifer:	Right.
Scott:	So, I would think when you’re sitting across the table with a term sheet with a founder and you connect on this, it’s actually like a really great way for you to win a deal or get into a deal.
Jennifer:	It is.
Scott:	Because you’re on the same wavelength.
Jennifer:	That’s right.
Scott:	Yeah.
Jennifer:	That’s exactly right. And when people push back on some of how we do things, that’s just an indicator that maybe we don’t fit well together.
Scott:	That’s what I was thinking about self-selecting out. It’s like, you know what? Because that happens to us all the time.
Jennifer:	That’s okay. It’s like a library. Lots of books.
Scott:	Yeah.
Jennifer:	There are bestsellers but there’s the long tail, you’ll find someone who wants your book. Maybe it’s not us.
Scott:	We have the same exact approach. Because like what we find, and it took us a couple of years to figure this out. Or actually I think Vanessa figured it out very early and it took me a little while longer because I had grown up in like M&A culture at a bank and you know, even though it was nice, Hambrecht and Quist was like a very nice place to work, but it wasn’t like Bear Stearns or something like that. Right? I think my level of willingness to put up with stuff was a little higher. But what I realized was that people who didn’t connect with us on a cultural level were burning out our employees.
Jennifer:	Oh, totally.
Scott:	Because they were treating our employees… I could take it, but maybe some people didn’t want to take it or they shouldn’t be expected to take it.
Jennifer:	There’s a lot of stress if you have part of that culture that is aggressive.
Scott:	Yeah.
Jennifer:	And part of it is more egalitarian.
Scott:	Yeah. And so, we made like a-
Jennifer:	Warm and fuzzy.
Scott:	We made a really conscious effort to define our core values and communicate that a lot. And we live by it now. And so, like if a client is not acting the right way, that’s not in the line with us, it’s like you said, there’s another place that would do their accounting and taxes.
Jennifer:	Exactly.
Scott:	And they may be a better fit for them. And so, we part ways because the attrition costs alone are insane and it gets people down and you just don’t want to deal with that stuff.
Jennifer:	Exactly. And we’ll see if this is a nice benefit of strong economies and what’ll happen when-
Scott:	I sometimes bring that up, too. Yeah, yeah, yeah.
Jennifer:	We have to put up with a lot more when times are tough.
Scott:	I know. That is like the bummer. Our employee base is kind of a full spectrum now, especially in the early days, we had a lot of young employees who’d never really kind of gone through a recession or something like that.
Jennifer:	Oh, exactly.
Scott:	And so that’ll be one of the big talking points issues.
Jennifer:	Yeah. And I think the mindfulness around culture wills, because it is a big movement right now. I think it will carry over into tougher times, but maybe with a bit more boundaries.
Scott:	Yeah. Well that’s really cool. I’m glad you did that. When you say like early growth stage, is that like series A, series B? [crosstalk]
Jennifer:	Series A, series B. So, they’ve launched a product, it got early traction, there’s product market fit. Now they need capital to grow, really go to market aggressively, get to their next set of metrics to raise the next round and start deploying it out. And so, as a smaller fund, we’re able to write a smaller check in those slightly later stages because we are a value-add platform for venture capital. Being able to leverage our network to the benefit of the CEO and the company. So key part of our network is one that SC had started called Products Account. It’s a really great forum association for product managers. She created it years ago as a product manager.
Scott:	No way.
Jennifer:	Yeah.
Scott:	It’s like the stack overflow of product managers or something like that? Or a community?
Jennifer:	Yeah. You know, where do you go to get… It’s something people learn on the job and it’s a really hard job. And it moves the needle significantly at a company of any size.
Scott:	Yeah.
Jennifer:	So, she created it for learning best practices, mentorship. It’s grown into a huge network of hundreds of thousands of product managers.
Scott:	That’s incredible. I didn’t know that.
Jennifer:	Yeah. About 10,000 executives in that set.
Scott:	Holy cow.
Jennifer:	Some are more active than others but-
Scott:	Is it an online community or is it-
Jennifer:	It’s an online community but they also do events.
Scott:	Okay.
Jennifer:	So, there are chapter heads in different areas that we’ll organize events, companies that will use their site to host it. Digital Ocean has been hosting it in New York for a while for example. And it’s very strong of course in the Bay Area, the West Coast, New York has gotten strong. So, we’re able to leverage that to source portfolio companies.
Scott:	That’s amazing.
Jennifer:	Yeah. And we won’t let any other venture capitalists have the same role in it as we do. Right? So, we can source deals as significantly. We can help our portfolio companies tap into that network as their product managers need help and support. Learning best practices, get mentorship, hire people, sell to these companies.
Scott:	That’s like a gift from God. That’s incredible. Have those resources, yeah.
Jennifer:	Eventually get acquired by these companies. So, Amplitude is one of our portfolio companies.
Scott:	Yeah, yeah, yeah.
Jennifer:	They were involved in Products Account for a while. They let us invest in a later round. Had to make room for our check because they were in high demand. And the CEO, Spencer, has said that we were the best value per dollar invested as an investor because it’s helped drive their sales.
Scott:	That’s incredible.
Jennifer:	Yeah.
Scott:	And I always tell people, I tell our team a lot too, it’s like having a permission asset, especially starting early in your career, pays dividends like 10 years later. Like almost like the podcast for me or Vanessa does a lot of writing, or like this network. You probably don’t know this about me, but I started a nonprofit social network for patients with rare diseases.
Jennifer:	Great.
Scott:	12 years ago.
Jennifer:	Oh really?
Scott:	It doesn’t really impact my professional life, but I learned a lot of lessons doing that. But like just the power of like these online networks and people connecting and remembering where they met or how they can help each other.
Jennifer:	There’s one thing we know about Silicon Valley, it’s all about the power of the network, right? Why do companies come here from all over the world? It just accelerates your growth.
Scott:	Yeah.
Jennifer:	And that’s a key part of how you get funding, how you drive sales, how you meet your acquirers and build your ecosystems. So, that’s our core differentiator, is we will bring the power of our network and our operational expertise to help you out as you build your teams and work through successive rounds of funding. There’s one portfolio company called Blue Dot. They moved here from Australia as they were starting to grow. They have highly precise location technology integrated in apps for retail, for transportation, for fast food. You know, McDonald’s, Transurban, Dunkin Donuts. Super precise, great story. They’re a portfolio company. We’ve helped them get their leads for series B funding.
Scott:	Nice.
Jennifer:	We’ve helped them source lawyers and a lot of value-add and often consult with them on their build out. Now, as they grow, they’re going to need more product strength and so Products Account is a great fit for them.
Scott:	I mean that is kind of the definition of a competitive advantage in venture capital. You had a family office; do you feel like the family office audience really resonates? The people that are looking at investing in Mighty Capital?
Jennifer:	It does. Yeah, it does. They need to understand how we’re differentiated. The fact we’re able to get access. A fund our size would normally be seed. Right?
Scott:	Yeah.
Jennifer:	To get access to these later stage deals and we’ve actually got four IPO candidates out of 10 investments right now.
Scott:	Oh my God, that’s amazing.
Jennifer:	Wasn’t even our goal. Having said that, we did go into Digital Ocean and Airbnb at later stages knowing they were IPO candidates. So that’s really rare and we’re excited about it. We actually talk about how to get some more M&A sort of opportunities. So that is very appealing to high net worth individuals, family offices. We do have one corporate LP right now. We’re starting to get, as we look at our fund path forward, a lot of interests from institutional now.
Scott:	Yeah. That’s incredible. Good for you.
Jennifer:	Yeah.
Scott:	I think that’s what they look for, that they want that. What’s your competitive advantage or how you-
Jennifer:	Because it is a noisy space.
Scott:	Yeah. Well also like if you’re getting in to like those kinds of companies, that’s the ultimate validation. Love to hear what you think about this. I see a lot of, like I love Twitter, I read Twitter. I see a lot of venture capitals talking about like ownership percentage.
Jennifer:	Yeah. It’s one approach and one strategy, especially the large VCs that will take it from A to… They want to keep maintaining an ownership percentage. That’s one strategy. Personally, I think it depends on the portfolio company and the opportunity and what’s the right approach for smaller investors. It’s, is the pie getting bigger and are you not getting crammed down as later stage investors come in? So, we always follow on if it makes sense.
Scott:	Yeah, yeah.
Jennifer:	For example, to stay relevant to the company and the opportunity.
Scott:	What I hear you saying is what I believe, which is of course it’s better to own more of a company that’s successful than not, obviously. The big funds do have huge amounts of capital they have to deploy. But that allows them to kind of justify higher valuations effectively because they’re like, “Oh I got to do the 20% or whatever.”
Jennifer:	It’s an issue. Yeah, that’s not the game we play because those are the whales and they’re mega funds and they have to return 3 billion on 1 billion or more than that. And so, they have to write checks to companies and justify huge valuations. These are companies that compete on cash and growing very quickly and blitz scaling. Not every company fits that model.
Scott:	And that’s kind of my point is like, call me old fashion. I just want to invest in good companies and if I can get 1% or 3% or whatever into a good company-
Jennifer:	Yeah.
Scott:	And as long as entrepreneur’s expectations of like the involvement will be, you’re not on the board and things like that, you’re still helping the company but you’re not going to be the number one board person.
Jennifer:	Right.
Scott:	I don’t understand why people get so hung up on it. I’d rather be in just a lot of great companies.
Jennifer:	People definitely have different motives here. So, I agree. And we do take board observers seats where it makes sense. So, we have a place in the boardroom. We don’t like surprises. We want to know what’s going on with the cash and so on and so forth. But I agree. I think getting three to five X cash on cash in a much shorter timeframe than the unicorn chasing is really attractive. I’m happy with a solid second base hit. I think the best deals are exit in 18 to 36 months. I think even the statue for the founders, it’s the best deal.
Scott:	Yeah. Well, it’s also like I think you’ve been in the game for a while. You know what you’re doing. And I’ve done it for a while and it’s like a lot of the people will, I’m three X on this or my IRR is this, but it’s so influenced by the economic environment and what the markets are doing.
Jennifer:	That’s right.
Scott:	When I hear people talking about this, about what they’re going to do in 10 years, I just like roll my eyes because I’ve been at funds where we were top like 20 you know, 75%, 80% percentile fund and we returned to two X.
Jennifer:	Right.
Scott:	We did really well relative to everybody else.
Jennifer:	Relative to what was going on in the market then.
Scott:	Yeah. So I don’t know. I feel like there’s a little bit of echo chamber or we’re spoiled by the economic environment right now.
Jennifer:	I guess I do think private investing has to follow some of what we know about public investing. Do it for the long term. Dollar cost average, diversify. And don’t just think about the one hit wonder. Right? That would be like day trading on the stock market.
Scott:	Yeah, that’s a good analogy. I like that.
Jennifer:	Right? And I do think for people building family assets, building worth, long-term capital appreciation, I don’t know how you can’t be in the private markets now because the next fortune 1000 are probably going to be privately funded and a lot of them aren’t even going to go public from the looks of it. They’re going to end up in private equity or other situations for a while. So, for long-term growth and I think that’s really important. Fewer companies are going public. There’s less access unfortunately to growth for 401ks and IRAs.
Scott:	I know, it’s a bummer.
Jennifer:	Yeah.
Scott:	Well and I think I saw that, I think it was Bumble, did like a really complex but like looked like a very lucrative private equity deal. Like they didn’t even go public. They just sold it to like 60% to a private equity firm which is kind of shocking to me because I still-
Jennifer:	What’s going on there is fascinating to me. Right?
Scott:	Yeah.
Jennifer:	I think their main objective still is free cash flow, EBITDA. It’s a great strategy, a great way to spend some of your money. But we’re seeing them start to try it again into deals where there’s no profit yet or there’s no cash flow and earlier stage deals. So…
Scott:	I don’t know either. The look on your face you’re thinking probably like how I am. Like I think of them as like LBO firms.
Jennifer:	Right, I know.
Scott:	And lever the company up and that’s how you pay yourself back. But yeah. God bless them for being opportunistic and entrepreneurial and seeing a whole new market and doing it.
Jennifer:	My husband’s a serial entrepreneur. He’s CEO of his second startup, founded startup and he’s going to raise a series A soon but after his seed I couldn’t believe how many outreaches he was getting from PE at their little puny size already for acquisition for investment. I’m like, I don’t get this. It doesn’t make sense.
Scott:	It’s crazy.
Jennifer:	He’s like, “Should I even talk to these people? I’m like, “Yeah, it doesn’t hurt to.” But I just see that as an interesting indicator.
Scott:	Yeah. Well that’s really cool. So you talked about Blue Dot. Are there other companies that you’re super pumped about in the Mighty Capital portfolio?
Jennifer:	I’m pumped about all of them, of course.
Scott:	Yes, of course.
Jennifer:	We’ve got a great set of portfolio companies, amazing founding teams. We are picky. We have a very robust due diligence process. The top of the funnel is maybe two, 3000 companies a year. Some four to 500 come in for initial screenings.
Scott:	Wow.
Jennifer:	Maybe a quarter of them come in for larger meetings, deeper dives. Maybe 15 every half go through due diligence. And we only do, you know, two to five of them.
Scott:	Wow, that’s amazing. That’s amazing.
Jennifer:	So, we’re really pumped. I’ve already mentioned Blue Dot and Amplitude. And of course, the Airbnb, we’re really excited to see what happens with them. Part of our investments, we talked about where we invest. So we do have a lot of enterprise B2B, SaaS kind of companies obviously. But about 20% of our focus has been on genomics and personalized medicine.
Scott:	I love that stuff, too.
Jennifer:	Yeah. Especially where it starts to intersect with big data. It’s hard to be an investor and not be in life sciences given the growth trajectories, but it’s a difficult space to navigate. And some of the investments can be very capital intensive. We don’t focus on the super capital intensive. So, we’re in two there, Mission Bio.
Scott:	They used to be a client, yeah.
Jennifer:	Oh, were they really?
Scott:	Yeah. When they were like a seed stage company through series A I think.
Jennifer:	Yeah.
Scott:	Great, is it Charlie?
Jennifer:	Charlie Silver.
Scott:	Charlie is a great guy. He’s super awesome.
Jennifer:	He’s a profile of the kind of founder we love, right?
Scott:	Yeah.
Jennifer:	Really smart, super professional, building this team around him. He reaches out to us when he needs help with an intro to somewhere or wants an opinion on something. He’s raised successive rounds of funding with Mayfield, Agilent. They continue to grow. So, they’re doing single cell sequencing, which is all part of eventually curing cancer. That’s a very high-level overview.
Scott:	So, I did my MBA internship at Becton Dickinson analyzing molecular genomics and diagnostics. So, I actually know what that is.
Jennifer:	Yeah.
Scott:	The never trust an MBA for an opinion was, I analyzed Illumina for the summer and I told Becton Dickinson not to buy them. For those who don’t know, Illumina was like a $700 million market cap at the time and now I think it’s 21 billion. So, that was probably the dumbest thing I’ve ever said in my career. I’m sorry people at Becton Dickinson, don’t ever listen to an MBA.
Jennifer:	Right. Well that’s a good segue. Another company we’re pumped on is Fabric Genomics, which-
Scott:	I haven’t heard of them.
Jennifer:	John Stoopnagel whose chairman of founder of Illumina, is chairman of-
Scott:	Oh, no way. Okay.
Jennifer:	Yeah. Chairman of Fabric Genomics. The CEO is Martin Reese. So, they do very rapid whole genome sequencing, applying AI to look for variants. If you’ve done rare disease work, you might find that really interesting.
Scott:	I do, yeah.
Jennifer:	Again, it’s fantastic technology. They can very rapidly in pediatric wards for example, help families and doctors figure out what’s wrong with them.
Scott:	Oh, that’s incredible.
Jennifer:	What used to take six weeks, they actually have Rady’s Children Hospital got a Guinness World Record for how quickly they could decipher what was happening with the whole genome sequencing. Like 19 hours for something that would have taken weeks where families are waiting for a diagnosis.
Scott:	That’s amazing. And for folks that don’t know, genomics has the combination of like software characters and like chip, like Moore’s law. I remember that was like one of the slides I put up for the CEO of Becton Dickinson and was like, “Here’s what Moore’s law looks like in Intel’s cost structure over the years. Here’s what it’s doing at the time metrics and Alumina and these companies.” And it was actually surpassing Moore’s laws curve meaning every data point you got was infinitely cheaper than the previous couple of year’s data point was.
Jennifer:	It’s a big data story, right?
Scott:	Yeah, yeah.
Jennifer:	Now that the sequencers are coming down in price, it starts to become more accessible. But once you do the sequencing, then what? It can be a needle in a haystack to know what you’re looking for. And that’s where companies like fabric-
Scott:	They sit on top of that. [crosstalk] Good for you. That’s awesome. Well, you talked about culture, Charlie at Mission Bio is like as good of a person as you can find. And I still remember, this is the really early days of Kruze Consulting, he was going through his SBAR audit. And for those who don’t know as a life sciences company, you can actually get a lot of free money from NSF, you know, pretty large grants as long as you are doing real research. You go through a process, but you get grant audits. And I remember me and Vanessa at 11 o’clock at night, the night before his audit going back and forth with him but he was like that kind of CEO. He’s getting it done.
Jennifer:	He is.
Scott:	He knew how important it was.
Jennifer:	He just executes, executes, executes.
Scott:	He’s a really good person. That’s cool.
Jennifer:	And he seems to do it with a level head, too.
Scott:	Yeah.
Jennifer:	There’s no crazy there.
Scott:	Calm at 11 o’clock at night before the audit is what you want. Real quick. So we’ve got just a couple other little things. We were talking before we turned the mic on. When you invest in a company, there’s a little bit of a honeymoon period because you invest, everyone invests in the company because things look pretty good. And the entrepreneur’s been wooed and you’ve wooed the entrepreneur and-
Jennifer:	Pop the champagne cork.
Scott:	Yeah.
Jennifer:	Yeah.
Scott:	But then there’s a moment, you talked about this a little bit earlier, like the capital goes to growth in hitting the metrics on the next round and usually it’s 18 to 24 months. When do you kind of start taking a hard look at the company and having that feedback from the entrepreneurs? Like, “Hey you’re on track,” or, “You’re actually surpassing track,” which is amazing. Or, “Hey we need to make some adjustments here or we’re not going to be able to raise the next round.” Like how do you talk about that?
Jennifer:	There are a couple of ways we manage that and that’s why rapport and relationship are so important. There are founders that really just want to check and then want you to go away and not bother them. And I get that for some people. Right? But that’s not where we play.
Scott:	Yeah.
Jennifer:	Of course, having said that, Airbnb doesn’t need our help, right? So the later stage a company is and the more mature the investors are in the room, the less we need to be on top of it. But we assign a portfolio company rep to every company to make sure there’s regular communication. We do quarterly portfolio reviews where we ask for certain information to see how are the revenues tracking, what’s your head count, how’s the cash, right? How’s the cash flow? To try to avoid surprises so we can have those conversations about, okay, what’s going on with your burn rate or where do you need help? Or is there somebody we need to hire? What’s going on here? So really keeping it in a very ongoing dialogue.
Scott:	Those are the variables too, like [crosstalk] cash.
Jennifer:	That’s the biggest thing. Rule number one, don’t run out of cash. And as you’re looking at your next round, do you understand how much time you need to do that?
Scott:	Yep.
Jennifer:	A lot of CEOs are overly optimistic about how quickly they’ll do their next raise, right?
Scott:	And what the numbers need to look like, especially as you get [crosstalk] tell companies is as you get deeper series B, series C, it becomes much more of a quantitative viewpoint because the numbers say whether it’s working or not at seed or series A.
Jennifer:	There’s enough data there and enough market experience to know and you’re competing more in the accounts. Earlier it’s so much about the idea of the market size and the team.
Scott:	So, it’s that collaborative conversation over time and being helpful and asking them like actual questions that can help them instead of… You always hear the board members who are like getting mad in the board meeting. It’s more about like, “Hey let’s be productive here and actually have a good rapport.”
Jennifer:	Yeah, because we’re partners as investors, we’re not lenders. And even there it should be a good partnership. Of course, when you do convertible notes as an instrument, technically it’s a dead instrument, but we want to own shares in the company and see it grow.
Scott:	That’s really cool. You have an awesome, amazing track record. Mighty Capital is doing really well. Maybe you can kind of tell everyone where they can find you and thanks so much for coming by. I really appreciate it.
Jennifer:	Sure. Our URL is Mighty.Capital. We go to several events. SCMO Audio has a robust speaking schedule. If you’re a product manager and you’re not already part of Products Account, strongly encourage you to sign up to that network to start getting into that conversation. And if you want to grow your career as a product manager, there are opportunities to help shape the conversation there. So, that’s the main way to find us. And I’m on LinkedIn, Jennifer Vancini.
Scott:	Jennifer, thanks so much for coming by. I really appreciate it. Shout out to Rippling for sponsoring Founders and Friends podcast. Check out Rippling for your payroll benefits and IT integration. You did awesome. Thank you so much.
Jennifer:	Thanks.
Scott:	All right. Take care. Bye.
Singer:	So, when your troubles are mounting in tax or accounting, you go to Kruze Founders and Friends. It’s Kruze Consulting. Founders and friends with your host, Scotty Orn.

Venture Capitalist, Jennifer Vancini of Mighty Capital, on product-driven VC investing

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