Skip to content

NFX Essays

Posts from the ‘Essays’ Category

Signal — The Founder-VC Network — Helping to Fix Fundraising

Main Banner - Small

A core problem for both Founders and VC’s is that finding each other takes too much damn time.

Too many meetings, too many emails, too much driving around.

Frankly, it’s medieval.

In the industry focused on disrupting every other industry, the core industry operations have not changed in decades.

Series A companies are often meeting with 25+ investors. Individual VC investors are regularly seeing 800+ companies per year and meeting with 300+.

Further, the very best or second-time founders often take money from people they know, or the people they had dinner with last night. It’s nearly random.

Fellow Founders and VC’s don’t always realize how medieval this is, because that’s how it’s always been done. People just jump in and do what everyone else is doing.

Founders call it “fundraising.” VC’s see it from their side and call it “sourcing.” Our networks, these relationships, are all around us. We just can’t see them easily. They’re invisible and not actionable.

The way our funding ecosystem operates is medieval. Where’s the software?

As co-founders of 10+ startups and also investors in over 250 companies, we feel the time drain acutely, from both sides. Having built networks of this kind before, we know the pain we could avoid if we can just get the software and community right.

Fundraising/sourcing should be like recruiting with LinkedIn, finding a real estate agent on Trulia, or dating with Match.com. Prior to these software platforms, those processes used to be horrible. We want the fundraising/sourcing process to enjoy the same transformation.

The status quo of VC fundraising is not OK. We can do better. And other VCs agree.

Great investors from Greylock, CRV, Mayfield, Shasta, and many other firms have been working with us since last year to build a tool to help transform the fundraising process.

That tool is called Signal.

Signal is a free tool to make the Founder-VC network visible and actionable.

SIGNAL_Logos

 

Thousands of VC’s have edited their profiles and connected their networks.

Signal helps you get the intros you need to the right VC’s. It allows you to privately make your invisible network visible. Let’s you track your progress in building that network, and lets you see the outcome of each connection you make.

Your Founder-VC network becomes an asset for you, speeding up your process.

There are now over 3+ million graph connections between top Founders and top VC’s.

Using Signal is the “software phase” where you use the network to intelligently shorten your list of prospects and get the intros to the right people.

Of course, this is still a people business, so the next phase should be to meet.

But by using software and structured data at first, both sides should be able to have better results with fewer meetings and less time.

Final Small

Privacy and control for top founders

Yes, others have tried building software around this challenge in the past, but it was only for very early stage companies only and was not used by the top founders or top VC’s. Signal is designed for the most desirable founders to use because it flips the model by giving them privacy and control from the beginning.

Do This

To save you a lot of time and hassle, Signal makes your Founder-VC network visible and actionable in four steps

  1. Connect your Gmail accounts (personal and professional) to reveal your intros paths into the Founder-VC network.
  2. Grow your Signal network by adding your co-founders, friends, other CEO’s and VC’s. When you join with your Gmail accounts, your Founder-VC network grows.
  3. Use The VC Lists feature to find specific VCs (not just firms) who invest in your stage/sector. VCs use VC Lists to broadcast the types of deals they are looking for.
  4. Edit everything. Complete your public profile if you’re a VC or build your private company page if you’re a Founder. Upvote the best VC’s. Edit VC profiles (yes, you can do that). Invite more people to connect with you. Build a Target VC list. All of these actions increase your visibility in the network and the quality of connections you can make.

Complete your public profile if you’re a VC or build your private company page if you’re a Founder. Upvote the best VC’s. Edit VC profiles (yes, you can do that). Invite more people to connect with you. Build a Target VC list. All of these actions increase your visibility in the network and the quality of connections you can make.

 

 

Community Tool and Network

As software entrepreneurs ourselves, we are wired to build software to solve problems that we see. As investors we like to collaborate with other great investors and help them find the deals that are a fit for them. Signal helps everyone, and it’s our first contribution.

We take a very long term perspective on Signal’s development. We’ve staffed up a significant engineering team. The software is free and always will be, it’s just something that needs to happen for our industry. Our team will constantly be talking both Founders and VC’s to see how the software can benefit them, so please reach out.

Software has streamlined other industries to great benefit in the last 25 years. We think it’s inevitable that it will also happen in our tech ecosystem.

In the future, Founders will have 25 meetings for their seed rounds instead of 75. Series A’s will have 10 meetings instead of 25. VC’s will spend a few hours per day reviewing companies online. They will be able to review 1400 companies per year not 800, but only have 150 meetings to get better results. Founders will get better feedback faster and evolve to stronger companies faster.

Edit everything.

Today we’re adding new features, including The VC Lists which is particularly useful and actionable for founders to find the right VC’s for their sector and stage, and for VC’s to broadcast what investments they are looking for.

We’re also adding a feature to “Upvote” VC’s in order to reveal online the informal recommendations that happen between Founders. This will help all great investors standout, regardless of stage or firm.

Please join in the community by spreading and editing. Typically, those who jump in early disproportionately benefit. Like in a startup, feedback is what results in something the community wants. So let us know what you think.​

Top Founders and VC’s are welcome to join – https://signal.nfx.com.

Notes: What Signal aims to solve

Challenges for Founders

  1. Time
  2. Finding the list of VC’s that invest in your sector and stage
  3. No transparency about which VC’s are particularly interested in your type of company right now
  4. Finding the right introduction paths to the right VC’s? (Your Gmail graph, merged with your top 50+ contacts Gmail graphs, shows you the best paths to all VC’s)
  5. Make your company look good to VC’s
  6. Getting intros to VC’s from your contacts when you want them (intro CRM)
  7. Getting helpful feedback and more concrete answers from VC’s you meet even if they say no.

Challenges for VC’s

  1. Time
  2. Missing out: Never seeing the deal that would have been perfect for you but the founders didn’t know to get introduced to you. (fill in your profile)
  3. Sifting through the 100’s of deals. Better to have them sent to you in a structured way in software or never get to you. Reduce the noise, increase the Signal. Only your trusted sources will send you deals through Signal. (Use your Gmail graph and connect with more people)
  4. Founders don’t give you the complete basic company information up front so you can decide to take the meeting or not (The Signal Company Page helps Founders do a better job of letting VC’s know the key data up front in a purpose designed interface for easy review)
  5. Staying top of mind with your best deal sources (These folks are typically CEO’s, investors and advisors who see deals earlier than you. Signal uses your graph to stimulate that network for you.)
  6. Not being able to broadcast a new investment interest into a reference to attract introductions from your network to founders who are working on that thing. (fill in your profile)
  7. Not getting constructive feedback on your reputation and service performance.

Your Company Name Matters…a Lot

Many people I consider otherwise excellent founders and investors believe the name of your company doesn’t matter.  

Unfortunately, they’re wrong.  It’s a blind spot for them.

A great company name can lift you up.

I woke up to the power of company names when we screwed up my startup’s name in 1999. We called it Emode which in hindsight was hard to spell, impossible to remember, and a dated name within 24 months. With coaching, we changed it to Tickle. Traffic shot up 30%, journalists started writing about us, our ad spend became 20% more effective, and no one forgot our name.  

What’s more, before the name change, we had an acquisition offer for $45M.  Just four months after the name change, we received an offer for $110M. A name change started a series of changes in how the customers perceived and reacted to us, how investors and acquirers thought of us, and ultimately, how we thought about ourselves. The power of language increased our valuation by 2.5X.

Having a great name doesn’t ensure success. But it can have a profound impact. It’s like a rudder on a boat, quietly steering your company’s direction.

Consider these other examples:

  • With a newfound enlightenment, I saw a similar thing play out in the battle of the early search engines. I was an Associate at Battery Ventures when the firm invested in InfoSeek, the first U.S. search engine. InfoSeek rarely won attention from press or consumers even though they had the superior product. Simply put, Yahoo! was orders of magnitude more interesting to talk about. And the numbers showed it. InfoSeek eventually sold for $72M and Yahoo reached a peak of $120B. It was then that I started writing a playbook for naming companies – in many cases, what we call things is equal or more important to how we build them.
  • My Partner Pete Flint was the founder and CEO of Trulia. His largest competitor was Zillow. He has said that the Zillow name was always better than Trulia’s, so his battle was always uphill. While Trulia merged with Zillow in a $3.5 billion transaction, Pete believes his odds of overtaking Zillow would have been even better had he chosen a stronger name.
  • In May of 2007, I wrote a blog post titled “Twitter, a great investment for someone”. I said there were two reasons Twitter would be a big deal, and one of them was that “they nailed the name.” It was clear even back then, that the Twitter name and the language convention of “tweeting” were a big asset providing wind to the back of the company. How much did it matter? I estimate it mattered a lot.

When you’re not in the room, the name of your company is what gets passed between people. It speaks for you when you’re not there.

Why does a name matter so much?  

It’s psychological.

People often aren’t aware of the impact your name is having on them. What emotions it evokes in them. Whether they think you’re strong or trustworthy or friendly or expensive. It sets expectations of your company in the blink of an eye. And first impressions are hard to change. Both positive and negative.

The wrong company name can tear you down.

You can destroy yourself with a bad name. In the case of Bodega, last week, it appears the combination of their name, who the founders were, and the way they designed and positioned the product were all factors. It may or may not sink the company, but it sure has made it a lot harder for them. 

Hunter Walk of HomeBrew is an investor in Bodega. He’s a very thoughtful person. He reflected last week on why he failed to see this blowback against Bodega coming.  

Our interpretation is that few people appreciate the true impact of a company name on its products, messaging, and positioning.

The Bodega controversy gives founders a window into a hidden truth – your company name matters a lot. My partners and I have seen firsthand  — as entrepreneurs and now investors — that names are like rudders on a boat. Under the surface, they quietly steer the direction of your company’s positioning, messaging, and even products.

Language is the human OS. Language needs to be in your company tool kit from the start.

Silicon Valley has long had a love affair with engineering, for good reason. Yet at a time when our software is touching every facet of human life, it would be wise for the best startup founders to start paying attention to language as a starting point for everything they create – because reaction to language is a fundamental law of how humans work.

That’s true of business focused companies, not just consumer focused companies. Companies like Domo, SkyMind, Jiff, Datadog, and Slack have given themselves a big advantage in the enterprise space by having memorable, spellable and evocative names. Not so much for InsightSquared, WellTok, and HipChat, their competitors.

Changing your company name is a huge lever and should be used more often than it is.

50% of the early stage companies we work with at NFX choose to change their names after we invest. Why? First, because they’re shown the power of naming and how to rename. Second, as they change their businesses or target customers, it makes sense. Third, they want to give their teams a fresh start with a clarified mission, and a name change helps cement that shift with their teams.

You can choose a company name that elevates you, cripples you, or has no impact at all. So why not arm yourself with an advantage from the start?

How to get your company name right:

We have eight guidelines we share with our companies. Five you should know now are:

1) Memorable
2) Spell-able
3) Avoid being “descriptive” like HipChat, DailyBooth, Excite, or MySpace
4) Do be friendly, like WorkDay, SurveyMonkey, PayPal, and Google
5) Being a little controversial is OK. A great name might hit 10% of the people wrong, like Tickle, Banana Republic, Monster or Virgin.

Get NFX essays delivered to your inbox.