VC Jenny Lefcourt explains why she backs founder-market fit

As a seed-stage investor, Jenny Lefcourt doesn’t at all times have loads of knowledge to again up her selections. As an alternative, the founding father of WeddingChannel.com and Bella Photos, now a normal companion at Freestyle, says “I’ve to consider sooner or later they’re portray.” Lefcourt, who’s a backer of corporations equivalent to BetterUp, knowledgeable teaching app, and post-purchase platform Narvar, explains how she assessments early-stage concepts, what traits she appears for in a founder, and why being an investor nonetheless satisfies her entrepreneurial urges

Quick Firm: How did your individual experiences as an entrepreneur form the best way you concentrate on investing in corporations?

Jenny Lefcourt: Going again to my first firm [WeddingChannel.com], the web—and other people’s consolation [level] with the web was what enabled the issue [of online wedding registry] to be solved in a singular and completely different approach than might have been completed a yr or two previous to the yr that we began it. And as a enterprise capitalist, I need to search for options for the now, and even higher, for the longer term.

Do you ever have individuals who come to you with a expertise looking for a marketing strategy and is that one thing that you’d spend money on?

It isn’t one thing that I spend money on. I feel expertise is nice. I see it as an enablement for various companies and options, but when I simply pitched AI, however with out an software of how AI will probably be utilized to unravel somebody’s downside or create a chance, then that’s not an funding that I’d make.

Do you spend money on folks and founders greater than their concepts?

It’s a part of the equation for me however I’m the investor who simply backs an individual, interval. I take a look at [founders] somewhat bit extra holistically. Who is that this particular person? Is that this particular person somebody that I can work very well with, but additionally, do I feel that they’re the precise particular person for this specific area? I name it “genuine founder-market fit.” Is that this founder is the precise founder for this specific alternative or resolution?

What do you imply by genuine founder-market fit?

I speak about genuine founders, who authentically have come to the chance [they’re pitching]. And I’ve additionally known as it founder-market fit. I’ll offer you an instance.  The primary funding I made at Freestyle is an organization known as Narvar, they do post-purchase [customer experience services]. The founder, Amit Sharma, had been concerned within the creation of the post-purchase expertise at Apple. He obtained to see precisely what [a 360 degree approach to customer satisfaction] did for top-line gross sales. And he realized the entire world goes to wish this, however not everybody has the perception and the assets to construct this, who what if Narvar builds it for retailers. They’ll all have a greatest in school post-purchase expertise with out having to see the longer term with out having to construct it themselves. And that’s what I invested in. He had perception that got here to him so deeply and it got here to him in such an actual approach, versus a man asking,”The place’s the cash to make and commerce?”

What are the traits you search for in a founder?

We have now a scorecard of traits we search for in a founder, however the No. 1 factor that I feel is required is a progress mindset. Every single day they’re going to should do one thing they don’t know the right way to do. You’d be stunned how many individuals are sort of uncomfortable and might discover themselves avoiding the issues that scare them. That often doesn’t bode nicely for the enterprise. So an individual who has a progress mindset is has an unfair benefit in opposition to others.

As a result of we make investments early, when [founders] are pitching me, they don’t have a lot traction if they’ve any in any respect. I’ve to consider sooner or later they’re portray. Then the query is, “is that the longer term?” I spend loads of my diligence time totally on the founder, however then additionally stress testing the longer term that they’re portray for me.

How do you try this stress testing? If everybody has the identical imaginative and prescient of the longer term, is it too late to spend money on an concept tied to that imaginative and prescient?  

It doesn’t fear me once I can sort of validate the developments of the market, as a result of it doesn’t imply that everybody is aware of what the answer is. I’ll give an instance: BetterUp mainly democratizes teaching. Everybody who’s had a coach loves it, however it prices some huge cash, and often is only for the C-Suite. BetterUp has discovered a approach to supply it scaleably and price effectively; the answer feels sort of apparent, so how I do take a look at to see if I  consider within the resolution? What do I must consider in to even be thinking about making this funding? Once I first began doing diligence, I’d flip to HR leaders and say, “I met with this nice firm that give teaching to all of your workers,” and so they mentioned, “I don’t actually need it.” I realized fairly shortly to alter the best way I requested the questions. So I’d say: “Do you all present teaching to your govt workforce?” They’d say, “They like it.”  Then I’d ask: “Have you ever thought-about giving it to your workers?” They’d say, “Oh, that would by no means occur, it’s too costly.” Effectively, what if it weren’t costly? And the way necessary is worker retention? And what would it is advisable to give them to carry on to them? You begin to put the items collectively to consider sooner or later that BetterUp is portray.

Do you must typically chew your tongue while you see founders doing issues in a different way than you’ll have while you had been launching your corporations?

I’ve to chew my tongue quite a bit earlier than I make investments. And the explanation I chew my tongue earlier than I make investments is as a result of I must guarantee that I’m shopping for into their future and the corporate they need to construct, not the corporate I see in my head. As soon as I make investments, I sort of make a dedication to the founder that I’m by no means going to chew my tongue. I’ll at all times give my view of the world. I strongly consider that an entrepreneur has to at all times make their very own calls 100%. My job is to show the lights on a lot brighter within the hallway they’re about to stroll down.

Do you ever suppose you’d ever begin an organization once more? Do you will have one other startup in you?

I don’t suppose so, however I’d by no means say completely not. I’m an intense persona. And as a founder, it was very all consuming and I beloved it and I indulged that. And a lot of the founders I work with are, are related. I’m now at a spot in life the place I really feel like I’ve extra worth to carry into this world by serving to loads of different folks on their journey. I’m discovering what I’m doing rewarding. So many individuals informed me the highs wouldn’t be as excessive, however the lows wouldn’t be as low. And I’ve discovered that the lows are usually not as low, however man, the highs are very excessive. I like seeing my founders be wildly profitable and sort of leapfrogging me.