Yuvo Health Expands Leadership team with Loren Anthes as New Head of Policy

Yuvo Health, a leading technology-enabled administrative and managed-care solution for community health centers, today announced Loren Anthes as its new Head of Policy and Programs. In addition to Anthes, Yuvo Health has also made the following six hires recently: Scrum Master, Birjis Ahmedi; Product Manager, Stephen Fee; Senior Product Manager; Nadia Trapala, IS Cloud Manager, Ajay Joshi; and Technical Writer, Daisy DeKnight. They will report to Head of Product Dakisha Allen, as well as Chief Technology Officer Sujata Bajaj, who both joined the company in October 2022.


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Launching the First-time Fundraising Series

“How do I find investors who are a fit for what we’re building?”

“How long do you think it will take me to raise this round?”

“What feedback do you have on my deck?”

“How do I convince an investor to lead our round?” (spoiler: a trick question!)

In our open office hour meetings, founders often have tactical questions about running their first VC fundraising process. Because every situation is different, broadly relevant advice is scarce. That said, there are certain facets of investor psychology and fundraising mechanics that are nearly universal. While many of them are obvious to investors, they are invisible to founders who are new to raising venture capital.

This blog series will not discuss data rooms, term sheet negotiations, Board meetings, or investor relations; there is a wealth of content on these topics already. Instead, we will focus on how to go from considering fundraising to having a term sheet in hand. Hopefully this series will shed some light on how VCs think and how founders can navigate the information asymmetry.

This series has three parts: 

  1. Deciding to raise: When and why is venture capital a good fit for a company? What are the trade-offs of raising? Are all VC firms the same? If venture capital is not right for a company, what are the alternatives?

  2. Running a competitive process: How do you minimize fundraising pain and maximize the odds of successfully raising? How do you find, approach, and impress investors?

  3. Building a compelling deck: What is the goal of a pitch deck? What are investors looking for? How do investors decide to take a meeting? How should a deck be structured? 

If you have any questions, feedback, or ideas for future posts, please let us know via twitter!

Landing a Meeting with a VC

In an office hours session last year, Alex Kennedy (Founder & CEO of Purposely.ai) asked me a question I’d never gotten before: “If a founder reaches out to you about investing in their startup, what do you look at online to decide if you want to take the meeting?”. This is a seemingly mundane question, but this first impression is critical to nail.  Here’s what I shared with him.

The goal of initial outreach in fundraising is to get a quick and accurate response from the investor: 

  • If it’s not a fit, find out fast

  • If it may be a fit, get a meeting ASAP

As an investor, to give such a response, I need succinct and accurate information to qualify the opportunity.

The first thing I need to know is whether the company is within our investment strategy at all. For Laconia, we’re specifically looking for pre-seed and seed stage b2b software companies, ideally in the US and Canada. If the company doesn’t line up with those factors, it’s a pass.

The second thing I need to understand sounds very simple but is rarely clear: What does this company do? This is critical for two reasons:

  1. To verify that we don’t have any competitive investments in the current portfolio (if we do, it’s a pass to avoid conflicts of interest)

  2. To decide if I’m intrigued enough to learn more

What does this company do should include the following:

  • What the product is (A web app? An API? A Chrome plug-in?)

  • Who the customers are (Insurance carriers? F500 CMOs?)

  • Why it is valuable & differentiated (Unique data set? Unique insight into the customer’s pain point?

The best scenario is when this information is contained in the initial outreach (e.g.: text/attachments of email or form submission). Ideally, I won’t have to look anywhere else. If it’s not in the initial outreach, then I’ll take 1-2 minutes to look at the company’s website, Crunchbase, and/or LinkedIn. If it is still unclear, then it’s usually a pass.

A few important notes:

  • The company’s information should be consistent in email outreach, website, and Crunchbase/LinkedIn profiles. While investor-facing positioning may be different from customer-facing messaging for good reason, there should still be consistency in the core product/value prop. Otherwise, it’s harder for me as an investor to determine what I’m considering. 

  • It should be clear who the founder and/or CEO is. If that is hard to figure out, or if someone other than the founder and/or CEO is doing the initial outreach, that’s a red flag.

  • I recommend including a pitch deck in your initial outreach. (Here is some context on how to put together a compelling deck.)

If you have any thoughts or questions, feel free to reach out to me via email at geri [at] laconia [dot] vc or on Twitter (@geri_kirilova). And, of course, if you are raising a pre-seed or seed round for a b2b software company, we are all ears via our pitch submission form 🙏

First-time Fundraising: Deciding to Raise

This is part 1 of a 3-part series on First-time Fundraising. You can read the overview of this series here. Here are part 2 and part 3. 

What does “venture-scale” mean?

If you decide to raise venture capital, you should know what exactly you’re signing up for. Let’s start at the beginning: what is venture capital? 

In simplest terms, venture capital is money invested into privately-owned companies with a high risk profile & outsized growth potential. 

An underrated element of venture capital is that VCs manage other people’s money. VCs raise capital from investors called “Limited Partners” who are typically high-net-worth individuals, family offices, corporations, or institutions such as endowments, foundations, and pensions. These LPs invest in VCs for various reasons, but generally, LPs are targeting 3x+ returns on early stage funds over a ~10-year time period.

Related to these return expectations are the definitions of “high risk profile” and “outsized growth potential”. While these terms will vary depending on VC fund size, structure, and strategy, seed-focused VCs generally abide by the assumed constraints of the power law. According to the power law, 80% of the returns come from 20% of deals (if not even more skewed). Said differently, VCs assume that 80% of their investments are unlikely to generate returns (this is the “high risk” part). As a result, each individual investment must have the potential to compensate for the losses of the rest in order for the fund to achieve its overall return goal (this is the “outsized growth potential”). For a deeper and more technical explanation of power laws in venture, check out Jerry Neumann’s analysis here.

In making investment decisions, VCs often evaluate whether a given investment has the potential to “return the fund”. Here’s a quick example. If a $50M seed fund owns, on average, 10% of each portfolio company at exit, the company will have to sell for $500M for the investment to “return the fund”. In order for the investment to 3x the fund, it would have to sell for $1.5B, and so on. The actual analysis regarding portfolio “survival rate”, dilution, follow-on investments, exit magnitude, and time period will vary from firm to firm, but this simplification illustrates why VCs generally shy away from sub-$1B potential outcomes, let alone sub-$100M ones.

Depending on business type, this return expectation dictates that a company has to grow fast (often 200-300% year-over-year consistently) and achieve $100M+ (if not $1B+) of revenue per year within 5-10 years. Of course, these goals vary by business model and fund type/size. While a $100M exit would not move the needle on the returns of a $2B fund that invested $2M at a $20M seed valuation, a $10M micro-fund (or an angel investor) that invested at $500k at a $5M pre-seed valuation could be thrilled. Understanding whether a VC’s deployment strategy and return expectations are aligned with your business goals is critical to making the right fundraising decision. 

So, should I raise?

Raising capital from outside investors doesn’t just affect your cap table and balance sheet; it impacts the operations of your business. Choosing to take on outside investors, whether they are individual angels or institutional VCs, is a big decision. 

A few key questions to consider:

  • Is this business opportunity venture-scale? Expectations for revenue, market share, and margin will vary by company, but there has to be potential for an outsized outcome as described above.

  • Are your aspirations for this business aligned with investors’ expectations? Do you want to try to build a multi-hundred-million-dollar business? Are you excited about that risk/reward trade-off? 

  • Do you need to raise capital? If profitability is within reach, you may not need to raise any external capital to run or scale your business. But in some cases, money is required for upfront product development, investment in key talent (including founder compensation!), compliance/security requirements, etc. In other cases, the competitive dynamics create urgency to capture market share, and capital is critical to accelerating sales, marketing, and customer support. Ask yourself what the alternative is if you don’t raise, and if the difference to the business trajectory isn’t material or existential, it is worth seriously considering alternative pathways.

Even more important than whether VC is a good fit for the business is whether VC is a good fit for the founder. By raising capital, founders potentially gain:

  • Network: Investors often have broad relationships that can help with hiring, business development, future fundraising, and liquidity.

  • Counsel: Some investors have specialized backgrounds in functional areas or verticals. While the tactical relevance of this experience may be limited, access to hundreds of data points can provide helpful benchmarks, aggregated best practices, and foresight in avoiding common pitfalls.

  • Accountability: Having to report to shareholders (and potentially Board members) provides a forcing function that can improve discipline, focus, and performance.

Of course, the true value-add of VCs (both individually and as a group) is variable and debatable, but if the above doesn’t excite you, I’m sorry to say that this is as good as it gets 😅 In exchange for the above, by raising capital, founders give up:

  • Full autonomy: Once you have external investors, the business is no longer entirely “yours”, and you have a fiduciary responsibility to act in the best interest of all shareholders. While issues of “control” are generally limited at the early stages, you still give up total independence.

  • Optionality: The stakes are higher once you raise external capital. While good investors tend to support founders’ decisions even if they diverge from the original plan, fundraising creates an inherent pressure to pursue larger outcomes. Because of the dilution, increased burn for the sake of growth, and additional risk, the venture track may ultimately be less financially lucrative for founders than bootstrapping would have been. 

  • Peace of mind: While the additional accountability may be a net positive, let’s be honest, having investors can be a pain in the neck. If you became an entrepreneur because you cannot stand to work for anyone else, having VCs may not be your cup of tea, either!

How much should I raise?

If despite all these caveats you still think venture capital is the right path for you and your company, you are now tasked with figuring out how much to raise.

There are two main elements to this question. The first is specific to the company and operating strategy. Working backgrounds from your end goal, think through the specific stage-by-stage milestones that you need to achieve, and consider how much you need to raise in order to reach the next set of goals.

The second is specific to the market: what’s “in market” for a specific stage? For example, raising a $10M-15M Series A (as of 2022) is not unreasonable, but raising an $8M pre-seed round is anomalous. Fundraising outcomes are not evenly distributed, and if the round you need to raise, for all good reason, outside the typical ranges for that stage, creating a viable fundraising strategy is trickier. The best way to get a sense of where your round lands is to chat with other founders (particularly those who have run a fundraising process recently) and investors to get input on what they’re seeing regarding valuations, round sizes, and other benchmarks. Companies like Pitchbook also regularly publish fundraising data, which can provide useful ranges.

If not VC, then what? 

If you decide that VC is not the right fit for your company after all, what are your options? Below are some alternative funding sources. This article also provides a good overview of the different funding buckets and trade-offs. 

Below are a few resources to consider:

Up next: running a competitive fundraising process. If you have any thoughts / feedback, reach out via twitter (@geri_kirilova) or email (geri at laconia dot vc). 

First-time Fundraising: Running a Competitive Process

This is part 2 of a 3-part series on First-time Fundraising. You can read the overview of this series here. Here are part 1 and part 3. 

You’ve decided raising venture capital is the right move for your business. How do you set yourself up to run a tight process and maximize the odds of closing your round? 

Hard vs harder raises

While raising is never easy, closing a round is hardest when it lacks momentum and investor competition. While fundraising has some similarities to b2b sales, there is one key difference: there is no inherent latent market demand for your round, and you can’t convince someone to buy. You have to generate sufficient demand and make investors want to invest.

It is very difficult to have active fundraising conversations and build top-of-funnel investor interest at the same time. Ideally, a critical mass of investors will consider the round at the same time, generating competition and a healthy dose of FOMO. Nothing ever goes entirely according to plan, but understanding these dynamics and spending sufficient time preparing before you kick off your raise can meaningfully accelerate your fundraising timeline. 

As we’ve written about before, early stage investors over-index on trust and belief. Founders with strong pre-existing relationships with investors, proximity to VC networks, and a “track record” typically have lower hurdles to overcome. But if you’re not Adam Neumann, you will likely have to set the foundation for a strong offensive position. 

You can break down the elements of a successful fundraising process into the following phases:

  1. Build a pipeline of prospective investors

  2. Establish familiarity with and/or access to these investors

  3. Prepare your materials

  4. Run a fundraising process

Build a pipeline

If you are setting out to raise a pre-seed ($500k-$1.5M) or seed ($1M-$4M) round, I recommend building a list of at least 50 qualified prospective investors to start. Make sure these investors are aligned with your stage, round size, sector, business model, geographic location, and values. Jenny Fielding (General Partner at The Fund) built a great Google sheets template (more context on using this template here). 

Finding investors that are a fit for your startup is the first challenge. VCs are easy to track down, but if you are raising a pre-seed round of less than $1M, you will likely want to supplement your list with prospective angel investors. Platforms like Crunchbase and Pitchbook generally have up-to-date info on active investors and recent deals. You may also want to check out resources like OpenVC, No Warm Intro Required List, and First Round’s Angel Directory. Twitter can also be a good place to discover active investors and communities (e.g. Amanda Robson from Cowboy Ventures has put together a list of 100 female and non-binary operator angel investors). For more context on how to build an angel network from scratch, don’t miss this article by Sapna Shah (angel investor, retail expert, and three-time entrepreneur). 

Establish familiarity and/or access 

Once you have this list, you need to find a way to connect. Ideally, an introductory meeting will establish mutual fit and interest. In this meeting, you should generally cover your background and vision for the company, in addition to learning about the firm’s investment strategy and general process. You can also use these meetings to further expand your network, as these investors may have ideas for others you should speak with as well. (Note: if you know that a specific investor prefers not to meet companies too far in advance, or generally moves very quickly, you may not need to meet them months before you raise. In those cases, it can be sufficient to just make note of how you will get in touch with them when the time is right – i.e. Do they have an open submission form? Do you know someone who can connect you?)

Inefficient and suboptimal as it may be, the vast majority of investors still prioritize warm referrals over unsolicited pitches. Your fundraising process will likely rely on a mix of both. 

If you are asking someone to make a “warm intro” for you, make it easy for them. This article on forwardable introduction emails by Alex Iskold (Managing Partner at 2048 Ventures) provides a simple overview on how to make this request.

If you are reaching out cold, make sure your efforts are targeted and personalized. If the investor is active on social media, you may want to engage with them there to build up some familiarity. Yuliya Belyayeva (Co-founder & CEO of Notus) created an excellent resource on cold outreach. Also ensure that your digital presence (LinkedIn profile, website, etc.) is consistent with the information you share via email (for more context, read this piece on what we look at online to decide to take a meeting).

When you meet someone, establish how they’d like to keep in touch. You could add them to your investor/community update list, you could agree to check in again in a few months, or you could make a note for yourself to send personalized updates. 

Prepare your materials

You’ve built a network of prospective investors, business is going great, and it’s almost time to raise. Before officially kicking off your process, prepare your deck and data room. Get feedback on these materials from existing investors, other founders, and trusted advisors. These materials will evolve as you gather feedback.

Run a process

Once you officially launch your raise, maintaining momentum is key. As much as possible, you want to move investors through the process in parallel. 

A common piece of advice is to first meet with your second- or third-choice VCs for practice; after all, you don’t want to blow your shot with your top choice. If this gives you peace of mind, go for it, but don’t overthink.

As you meet with investors, make sure to ask for feedback. What is their initial reaction? What are their hesitations or open questions? What are the next steps? Use this information to provide additional materials that may assuage any concerns, potentially adjust the pitch, and keep the process moving forward. 

When investors ask where you are in your process, be honest, but don’t divulge too much detail. If you are still in early meetings, you can say something like “We are in the middle of first meetings with potential investors. We’re expecting to go into due diligence over the next 2-4 weeks and are aiming to close the round before the end of next month.” As you move into due diligence and approach term sheet discussions, keep everyone in the loop and nudge them to see if they require additional information to move forward with their process.

Keep in mind that VCs know and talk to each other. Never overstate or misrepresent where you are in the process with another firm. Exaggerating urgency or setting arbitrary hard deadlines (“we are closing the round this Friday and need commitments by then”) can backfire as well. In order for the FOMO and momentum to work, you have to legitimately have enough irons in the fire. Finally, don’t be afraid to push investors to a “no”. 

Putting the pieces together

Here is an example of a potential timeline for this process, end to end:

  • March 1 - March 30: build a pipeline 

  • April 1 - July 30: establish familiarity and/or access

  • August 1 - August 30: prepare materials

  • September 1 - September 30: kick off the process and secure first meetings with all prospective investors 

  • September 15 - October 15: secure second meetings / enter due diligence processes with some investors (inevitably these will be some overlap between 1st meetings and 2nd meetings because of scheduling constraints)

  • October 15 - October 30: complete due diligence, confirm a lead investor, and sign a term sheet

  • November 1 - November 30: secure follow-on investors and close round

If you are gearing up for a raise, your pitch deck is likely the most important document to create. The last article in this series digs into this topic. If you have any thoughts / feedback, reach out via twitter (@geri_kirilova) or email (geri at laconia dot vc).