Launching a startup is one thing; finding an investor is another. Most founders know that searching for the right investor can make or break a company’s ability to pivot and scale. From business decision-making to coaching, these VCs are the guiding force that every entrepreneur needs to make big swings and stay on track.
On today’s episode of Startups On Demand, I am joined by Aviad Ben-laish, Principal at StageOne Ventures, where he brings experience in partnering with startups as well as mentoring and helping teams to scale up.
We talk about the importance of speed in early-stage startups, the involvement of investors in helping founders pivot their company, and the 3 main criteria StageOne is looking for in an entrepreneur.
Omri: How did your experience in consulting help you in your VC career?
Aviad: I think it helped with the way I think about investments. I think one of the things that you realize in consulting is that clients, especially large enterprises, don’t necessarily care about how things are done. Technology can be X, Y, and Z. As long as they get the value, and as long as it does what you told them it’s supposed to do, then that’s good enough. For me, technology for technology’s sake is very interesting, but I try to leave that for universities and research. But if you’re looking at it from a business perspective, if a solution does what it promises, then the client won’t necessarily care if it’s the most cutting-edge technology or if it’s done by a team of 50 outsourced people. For me, it’s important because we see startups who put too much focus on “this is the best technology ever” but why should the client care? At the end of the day, it’s the use case. It’s the value for the client, then technology comes second. It’s the enabler, but it’s not necessarily the driver.
Omri: Is speed something you look for in entrepreneurs?
Aviad: Yes, it’s definitely part of the things we’re looking for because it’s a comparative market, and there are almost no blue oceans out there. You can always face competition, even with incumbents or startups. So speed is definitely important. But you need to do it in the right way, otherwise, you’ll stumble and fall when you don’t have to. So I think for us when we’re trying to help founders, we always tell them to take a step, make sure they know where they’re going, and move ahead. When founders don’t usually have a very strong business background, it’s in the value that you try to provide. But at the end of the day, it’s important for us to find a founder that we don’t necessarily need to babysit. It’s okay to help and give directions, but we’re not gonna run the company for the startup. They need to prove that they’re able to build the company.
Omri: How involved are you with your portfolio companies?
Aviad: That depends on the company and its stage. In the early stages, sometimes you need to be more involved, especially with the introduction to potential clients and other investors. But if the startup is still building the code and working on the technology, there’s not much that you can do. It’s totally up to them. There are areas and periods where there’s definitely a spike in our involvement, but most of the time, it depends on the startup. Naturally, as the company grows, raises a couple of dozen million dollars, and hires several employees, it becomes more structured and there’s less for us to do.
It really varies from one startup to another, especially the more deep-tech the technology is, probably the fewer things we have to do early on because it takes longer to get the technology to the point where it could sell.
Omri: Do you think your main value is in the early stages of the startup where there’s less structure with helping the founders cope with what they do next, and once they raise their seed, then you guys still take an active part of the board but not as much previously?
Aviad: No, I think that’s a bit too early, but probably once they get to series C, there’s a bit less involvement, because the company’s ball is already rolling. Early on, there’s definitely more to do, especially in the business and coaching side. When you pick an investor, it’s kind of like a marriage – an early stage fund, we’re there for about 10 years; investments are usually about 7 to 10 years. So we get to build relationships with our founders, and being one of the first investors, that’s the kind of relationship that lasts even much later on. So even though we have much less to do on the business side, they will still come to us for advice.
Omri: What are your 3 criteria for investing in a founder?
Aviad: Initially, on a personal level, there has to be a good connection between you and a founder, because you’re gonna work together for a long time. You need to know if you’re able to give them advice and if they can take advice. In the first few meetings, although it’s not professional sounding, you need to like the person and you need to see that they like you back. You don’t want to be just a checkbook.
The second part is there is a connection or experience of that specific founder of that area that they’re building. It’s not a must for an investment, but if the founder is looking to solve a problem based on a pain that they’ve experienced personally, I think it’s a much bigger draw for us and it makes the case much stronger because being able to relate to that market will really help them later on.
Lastly, it’s about the vision. We do look for founders with a big, long-term vision, and not looking to sell early. A multi-billion dollar company, ideally.
