How does Wavelaunch make decisions?
We don’t believe venture capitalists can foretell the future; we believe founders can. And we turn to founders to show us the way forward. We were lucky enough to invest in Slack before the on-demand economy exploded. Before everyone else got into influencer marketing, we invested in InfluenceBLU. But there is one element that all of our businesses have in common: we met the founders when they were just getting started.
Yes, we concentrate our investments in enterprise, consumer, hardware, fintech, and healthcare. That isn’t the end of our inquiry. If you’re working on something different, we’d still like to hear from you and learn more about your vision for the future.
The biggest factor in our decision-making is always the founding team. How innovative, resourceful, and resilient are you? What’s your superpower? Why are you going to be the ones to prevail where others won’t? What is your history shows that you thrive off the beaten path?
Of course, we evaluate product and market too, but to be honest, we mostly look at that to evaluate the strength of founders too. Looking at what you’ve done already for this company — and before in your career — gives us a record of hundreds if not thousands of decisions you’ve made to get you where you are today. And that’s what success lives or dies on in this industry: the ability for founders to make really quick, good decisions.
We want to understand how you do it, and we give that a lot of weight.
It’s insanely difficult to build a long-lasting business. You must overcome inertia, have a tremendous degree of conviction, and be willing to break down barriers. You can’t wait for a map to be handed to you. You can’t even wait for a map to become clear. You must be able to both draw and execute it at the same time. This is an extremely unusual set of abilities, and it’s what we look for in every conversation with a founder.
That is the first. Then there’s the usual stuff: honesty, credibility, market knowledge, learning capacity, and so on. But there are a few additional issues that haven’t been written about or debated to death but are crucial:
- Delayed gratification
Being a founder is a never-ending, arduous exercise in postponing happiness and success. The most successful entrepreneurs are willing to make short-term sacrifices in exchange for long-term results. We look for your willingness to make these choices earlier in your life and career when we consider collaborating with you as a founder. Did you forego spring vacation to work on a long-term project? Did you work during your school years? Have you ever completed a project that took months of heads-down crunch time to complete?
- Admit unknowns
We always run into the same two sorts of business owners. The first believes they are supposed to know all of the answers to all of the questions. So, even if they shouldn’t, they’ll make sure they always have a definitive response. They’ll reveal their price strategy. Why they’ll be able to compete with Google. In three years, what will drive client churn? They inform us that possible threats don’t exist whenever we try to handle them. This is not the type of founder we want. When they can, the second type of entrepreneur will respond to queries, but if they don’t know, they will say so.
When questioned about pricing, they might respond, “Well, depending on the results of certain tests we’re performing, we’re contemplating a few different choices.” “We don’t know what our numbers will be, but here’s our model based on comparable companies,” they might say when asked about the cost of customer acquisition. When asked about the dangers, they name a number of them and engage us in a debate about how to deal with them. The founder who admits to their lack of knowledge has significantly more credibility. Nobody expects a pre-launch company to know everything. In fact, if you believe you do, it’s a red flag. Don’t try to convince us that you’re 100 percent correct. We’d rather know how you’re approaching the market, assessing risks, and taking on unknowns.
- Good storytelling
All successful entrepreneurs can tell captivating stories. They must be able to sell in opposition to the established quo. They need to persuade investors and personnel that this improbable project is about to become a global phenomenon. They must attract media attention, keep their board of directors aligned and enthusiastic, and continuously bring in new customers. It will be difficult for a founder to do any of this if they are unable to convey an incredible tale.
- Founder-market fit
We’ve lost a lot of money betting on seasoned business owners pursuing consumer ideas, as well as the other way around. This isn’t to say that our decision will be based solely on domain expertise; it simply means that identifying whether a founder is capable of succeeding in the sector they’re entering will be an important element of our process. We require a compelling argument.
- Rate of execution
Great entrepreneurs move at a breakneck speed. So, if we meet with an entrepreneur for six weeks, we’re also keeping a careful eye on what they’re doing. If the company has been around for 90 days or six months, we want to know how much they’ve accomplished during that time. There are numerous leading indicators.
Above all, we seek out intriguing and unconventional perspectives on how the world works. What do you know about a market or a demand that no one else knows about — and that other companies in the field get wrong? And why do you think your organization has the best chance of closing this gap?
Second, if you have a product on the market, we consider a small group of enthusiastic early customers to be a strong indicator. We heard a few of our founders gushing about Looker, a new business intelligence tool, a few years ago. We made contact with the company and decided to invest. We want to know if there are folks that rely on your product or service and wouldn’t be able to function without it. That is one of the most compelling data points you can provide. We’d like to see innovative thinking in both go-to-market strategy and product development as a result of this. Both are taken seriously by the greatest startups.
Third, we examine the market you’re pursuing in-depth. Let’s pretend you’re the overall winner. Is it worthwhile to compete for the prize? The game is long and difficult, and some markets pay off more than others. On-premise software makers have a different set of options than SaaS companies. Third-party e-commerce sites are valued differently than first-party retailers. To mix metaphors, before a founder begins construction on their castle, they must first ensure that the land they have chosen is suitable.
What’s our investment process?
The responses to this question differ from one organization to the next, but there are some common processes that everyone follows. While we typically strive to go at the founder’s pace, there is one crucial rule to remember: the less time we have to make a decision, the more conviction we must have in a company. We can spend months building a relationship (which, honestly, we prefer). In some cases, we can go from an introduction to a conclusion in less than a week. Here’s a general outline of what to expect:
Initial meeting: Before we meet, we’ll review the material sent by the founder. The idea here is to check whether the company meets our fundamental investment requirements, and make sure it’s not in direct competition with any of our other investments.
Second meeting: The majority of our “passes” happen after the first meeting. If you make it through that meeting, you’ll spend more time with your Wavelaunch partner as we both learn more about one other. This is our opportunity to hone in on specific aspects of the business about which we have questions.
Follow-up: All of our decisions are made as a team in our collaboration. As a result, we frequently suggest promising founders to another Wavelaunch investor for a follow-up discussion.
Partner meeting: If these conversations go well for both of us, we make some reference/due diligence calls and invite you to meet with the rest of the partners at our twice-weekly investment meeting. Here, you’ll have about an hour to tell your story to the entire partnership and answer questions.
Final Decision: Our partnership will discuss your firm in great detail after your presentation, to provide you with a final response within 24 hours after the meeting.
On paper, ideas are simple to describe. People aren’t though. That’s why we’ve always placed a premium on recommendations from people we know and trust. This covers those who lead and work for Wavelaunch startups, as well as angel investors, other entrepreneurs, and so on. It provides us with more information to work with.
However, we know that great ideas can come from anyone, and there are lots of fantastic founders out there who lack these connections – notably those from underrepresented backgrounds in IT. With this in mind, we’ve established a form where you may submit a potential investment for our staff to consider. Apply here to be considered.
Despite the fact that our partners have a wide range of interests, we work in a very collaborative manner. We routinely examine investment prospects as a group and frequently pass them off to the partner with the most industry experience (or is located in the right geography). The investing team is always talking about what they’re seeing and finding interesting. So don’t be hesitant to contact your nearest connection to get things started.
Terms of Investment & Ownership
Typically, we invest between $750k and $4 million in a startup, but we’ve gone higher and lower in other circumstances. Our typical first-time investment is currently approximately $2 million.
We’re dedicated to helping our firms with follow-on investing as the country’s largest seed-stage venture fund. In fact, we set aside the same amount of money for our second investment as we did for our first.
No. Unlike some typical venture funds, we do not require 20 to 25 percent ownership. We prefer to possess a significant portion of the firm so that we can devote significant time and resources to assisting you in your development. After your seed round, we’d like to have about 15% ownership.
We are willing to invest in any round. We’ve invested in rounds as small as $100,000 and as high as $5 million, with an average size of $1.5 million. Wavelaunch provides the same experience regardless of check size.
What’s it like to work with us?
We want to be the best partner in the world for founders in the early phases of their businesses, so we built the company to achieve just that. When you collaborate with Wavelaunch, you receive a team of super-active partners that will work alongside you on both major and minor difficulties. Whether it’s developing a fund-raising strategy or considering your organizational design, we’ll be there for you through the ups and downs of starting a business in those crucial first few years.
Furthermore, you will have access to our Team, who will work with you to expedite the difficult nitty-gritty of starting a business so you can focus on what makes yours unique. We’re here to help with all of your needs, whether it’s our Pitch Assist Team preparing your Series A deck or our Talent Team connecting you with top-tier applicants.
Most importantly, we were the first to propose the idea of turning a portfolio into a community. When our partners were first starting, the best advice and assistance they ever received came from fellow entrepreneurs. That’s why we offer the tools and forums you need for employees across your organization to learn from and assist one another. You can profit from the collective wisdom of many people if you’re a PM, CFO, or junior marketing. Visit our Philosophy page to learn more about how we do this and the services we provide.
Many early-stage entrepreneurs don’t have an instinctual notion of how they’ll acquire consumers. They may be familiar with the typical levers to pull and experiments to do, but each firm is unique — and in some cases, highly unique if they’re working in a new area or domain. Whether you’re a consumer brand attempting to perfect early paid marketing or a business planning its go-to-market strategy, the best way to get up to speed quickly is to learn from others who have been there before you.
Our partners have worked with hundreds of founders on their early growth and customer acquisition plans and trials, in addition to being entrepreneurs themselves. We’ve seen every type of company, sector, and approach imaginable, and we make a point of sharing what we know (along with hard-won lessons from our prior businesses) in weekly working sessions between partners and founders. If we don’t know the solution, we’ll find someone who does. It is our responsibility to make it simple to locate.
Wavelaunch allows everyone in our community (from all of our companies) to openly share their concerns and difficulties, ask questions, explain their challenges, and share what they’ve learned with others.
Finally, we have a real-world database of hundreds of specialists from various functional areas that we can connect to our clients to deliver tailored, situation-specific advice. These individuals, who have worked at organizations both inside and outside the Wavelaunch portfolio, have told us everything they know in great detail so that we can connect them to the relevant problem-solving possibilities on demand. So, whether a startup has to restructure its sales force, do an A/B test on its landing page, or calculate its CAC and LTV, we can set them up for a call, coffee, or meeting to solve the problem and propel them forward quickly.
Growth isn’t something that happens by itself. It’s a grind. It’s navigating the frontier without a map and hacking through the forest. Every time. When that’s your reality, all you can hope for are the best guides, and we’ve got you covered.
After our original investment, Wavelaunch firms have received over $17 billion in follow-on capital across 1,000 rounds, and we’ve kept a close eye on them all. This means that, no matter how bright our founders are, our partners will always have more expertise in raising financing than we have. Using this information, we do everything we can to assist our firms in reaching Series A and beyond.
These lessons are part of our Pitch Assist program, which was created to help businesses get through the most difficult phase of launching a business: the pitch. Every project begins with a strategy consultation with our team. Based on our experience with practically every tier one investor in the country, we figure out which VCs starting teams should pitch to and in what sequence.
We link entrepreneurs with a dedicated designer and content expert for a 4-6 week boot camp once a cohesive strategy has been established. They emerge with a finalized fundraising plan, an engaging narrative, a stunning presentation (created in-house at Wavelaunch), and a bulletproof story that highlights their unique value proposition. Our entire cooperation gives Wavelaunch founders plenty of rehearsal time to ensure they nail their presentations right away.
Pitch Assist has helped over 30 startups raise more than $500 million since its inception in 2014. As market conditions change and the Series A pool shrinks, this type of resource is becoming increasingly valuable.
Yes, in some circumstances we do. What will remain constant is that we will be quite engaged in assisting you in the first two years of your company’s existence. We frequently take a board seat at first, then hand it over to a new investor in later stages. (We’ve discovered that entrepreneurs appreciate this since it allows them to keep track of the size of their boards as they expand.)
We like what we call “working sessions” outside of board meetings. Every 4 to 6 weeks, we dive into a significant problem with a founder. We’ll spend the entire meeting figuring out how to solve the problem, and we’ve discovered that this form of collaboration is considerably more beneficial than standard reporting and governance. However, we also know how to conduct ourselves and make an impression in more formal settings. (By the way, if you’re searching for board meeting best practices, this essay from one of our favorite board wranglers is a must-read)