How this investor widens its net by refusing warm intros
I have often been annoyed by warm introductions. I get why investors insist on them, but it has always struck me as lazy and un-inclusive.
So I was filled with great delight and curiosity when I was introduced to GoAhead Ventures. The firm claims it will hear anyone’s pitch, no matter where in the world you are or what you are building as long as you are a pre-seed or seed company.
The catch? They insist on a video pitch. The upside? They promise to get back to you within a day to let you know if you’re through to a partner meeting. Assuming the (very light) due diligence goes to plan and they like your company, you could have the money in your bank account within a week.
This approach is different enough from most venture outlets that I decided to talk with Clancey Stahr and Phil Brady, both managing partners at the firm, to find out what life is like with the proverbial VC doors thrown wide open. I was also keen to get the inside track on what the firm looks for in investments and what founders can do to stand out.
“When we were getting started, what we were doing was very similar to other VC firms: We were trying to do some thought leadership, do some grassroots marketing around the Stanford campus; that kind of stuff. But it wasn’t until COVID that we started to differentiate and move into our current process,” says Stahr, describing the firm’s journey from 2014. “Phil created and drove that.”
COVID changed investing for a lot of firms. Gone were the days of in-person meetings and everyone had to deal with days of Zoom-induced chaos. That’s when GoAhead decided to try to rethink its processes.
“We wanted to figure out how to scale [our process] up most effectively. Now, we just have founders submit a video pitch through our platform. It literally takes about five minutes from start to finish; it’s a four-minute elevator pitch. They just fill out some basic information like their name and company name ahead of time. From the moment they submit that pitch, we let them know in three days or less if we want to invite them to a partner meeting or not,” explains Brady, revealing that the firm gets more than 3,000 pitches per year.
The company still maintains its promise of a three-day turnaround. “If we invite them to a partner meeting, we give them a final decision the next day at five o’clock. So the entire process can be done in a week. You could submit a pitch on Monday and you could have money in the bank on Friday, feasibly.”
“We get people a decision the following day, so we don’t have time to review what other firms are doing. We just state the amount of money we want to invest and the valuation cap we want to invest at.” Clancey Stahr, managing partner, GoAhead Ventures
On the face of it, it seems like a very founder-friendly way of deploying capital: Anyone can pitch and once they do, the process is transparent, quick and relatively streamlined. Most importantly, the fact that anyone can submit a pitch on its website means the firm presents a level playing field to potential investments.
“We do deals anywhere in the world. We cover all sectors. We’re completely flexible and the only ‘gating factor’ is that we are only focused on the early stage. Aside from that, we are just choosing people, so we wanted to put all founders on equal footing. We felt that most other funds ended up only inviting founders to pitch if they have some kind of warm intro or some kind of strong pedigree in their background that kind of gets them in the front door,” said Bradley.
“We love to be able to watch all these pitch videos apples-to-apples to try to decide without other extrinsic factors. So far, it has been great. We launched it around COVID and it has really skyrocketed our deal flow in ways we couldn’t have imagined. I think it’s been kind of a win-win for founders and for us.”
Picking a fight with warm introductions — replacing them with the hurdle of having to record a video — has given the firm an edge, it believes.
“There are a lot of really well-known firms. When you go to their website, it says something like ‘Find a partner for a warm introduction to the partnership.’ For us as emerging fund managers, the most frustrating thing about starting a VC fund is also fundraising. Everything about the process sucks. You need to find a warm intro to this billionaire. You need to find someone who knows someone who knows someone — the process is entirely unclear,” Stahr laments.
“You meet someone, they say, ‘Oh, this sounds great,’ and then they disappear. I know that happens to founders all the time, too, and all the fine-tuning we’ve done to our process around the top of the funnel as well as making it transparent is mainly built around our frustration with fundraising for our own funds. We just hated that so we decided to change it.”
The firm is explicitly not investing with a consensus-driven model: If one of the investors wants to write a check, they can, even if the others think it’s an awful idea.
How this investor widens its net by refusing warm intros by Haje Jan Kamps originally published on TechCrunch