“The Black Swan of 2020.”
“VCs are open for business as usual.”
“Don’t raise money this year unless you absolutely need to.”
Filled with extremes and contradictions, 2020 was a trial by fire for us all. While simultaneously shouldering the personal toll of an unprecedented pandemic, economic crisis, and social and political turbulence, every business leader was forced to rethink their operations under completely new circumstances.
For venture-backed founders in particular, where the professional is in many cases deeply personal, too, the overnight transition from full-team retreats, client meetings, and investor coffee chats to 100% digital communication raised a fundamental question: how do we build trusted relationships in an entirely digital world?
For us at Laconia, this topic is nontrivial. Foundational to our approach to B2B seed-stage investing is building and supporting a highly concentrated, high conviction portfolio. During our diligence process, we spend far more time understanding and testing our potential partnership with founders than we do crunching numbers. This human element is so central to our work that the concept of investing in founders without meeting them first would have been unimaginable for us a year ago. But these past few months of trial and error have proven that we can indeed initiate, build, and sustain the deep interpersonal working relationships that our approach is predicated upon. For anyone navigating the fundraising process for the first time or struggling to feel connected to a distributed team, we hope some of our takeaways come in handy:
Finding new partners requires a more intentional strategy, as the in-person serendipity that we’ve been accustomed to has vanished. While accessibility is probably at an all-time high, establishing trust remains tricky, as personal connections and referrals remain major factors, especially for investors. As founders prepare to raise from investors whom they don’t already know, establishing multiple digital touchpoints and strategically building a communication history can help garner familiarity and shorten the trust-building process.
Frequency matters, especially when founders and investors are first trying to get to know each other. Multiple 30-45 minute discovery meetings held over different days have been more effective for us than single, extended meetings. We have found people tend to present slightly differently on different days providing more insight into who they are, how they think, and how they work.
Zoom fatigue is real, and shorter meetings garner more focus. For board meetings, for example, the typical three-hour format is simply mind-numbing in a virtual setting. The digital constraint has forced us to significantly shift content reviews pre-meeting and cull agendas to the most essential priorities and discussion topics. For other community events, platforms like Icebreaker and Kumospace add some much-needed variety.
Despite the fatigue, impromptu 5-15 minute video meetings can be invaluable, as voice, facial feedback, and collateral materials on the spot make for surprisingly impactful and high-touch communication in small bites. We’ve made it a point to do quick “no agenda, no talking about work” calls just to check in with founders, co-investors, and LPs purely as people, and they’ve done wonders to keep us feeling connected despite the distance.
Some virtual meetings are here to stay, even post-COVID. The amount of time wasted commuting and traveling for introductory meetings now seems medieval. Moving forward, the majority of our first-time meetings with founders (and LPs) will likely be over Zoom, saving everyone a lot of time to focus on deeper work. (On a tangential note, we are excited to leave group phone conference calls in 2019!)
Looking ahead to 2021, we are cautiously optimistic about roundtable dinners and hugs in our foreseeable future. Until then, we remain a quick text, tweet, or Slack message away.
Stay tuned!