Easy Rent? Kiki? Girls Club?
Jock Fairweather ??
I help founders uncover their early believers and turn them into incredible advocates.
Throughout the development of the stories regarding Kiki, I’ve witnessed a few comments made by founders and alike that are slightly off the mark in regards to Venture Investing.
People who are making commentary about not getting a ‘look in’ via VCs seem to commonly miss two of the key points about VC investing.
(I’m not here for any other commentary other than what it takes to get VC investment).
The game of Venture investing is to find outliers, and when you’re looking for outliers, everyone has a different thesis, but you can be certain that everyone is looking at these things:
An outlier is someone who can return your total funds deployed many times over and is often <1/30.
So the definition is literally a diamond in the rough, and from Community Vc’s experience with the volume of deal referrers we have, we filter >1000 deals per year and we can tell you they are hard to find.
A)
From our experience the best returns we've had are via quieter, confident, frugal founders - but you can’t deny the crazy ones like We Work founder etc. that do make early investors insane returns just by being so out there.
Due to the tall, poppy mentality of Australia at large, it is very very hard to find people like Toby so when anyone comes across people like him, I do believe you actually do have to send it.
In saying all of this, I’m not defending or supporting Kiki or anyone else who invested in Kiki - but it could definitely be said (from experience) that people like that Kiki founder need a lot of support and grounding to reach their potential.
It seems the larger backers if Kiki didn’t support Toby as he needed - however trying and failing quickly and returning whatever money Kiki can is much much better than dragging it out and using all the money.
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B)
Beyond the energy we’re looking for mentioned above, I’d say in total we’ve come across 5 early-stage founders who could even tell us what a typical Venture (backable) Plan looks like and can reply to our questions about what it takes to be Venture backable.
Ie.
What is the progression of growth from y1-y10 from first revenue (typically) 3x3x3x2x2x2 to achieve > $100m revenue VS the ACV multiplied against a percentage of their TAM - look like?
Like so:
In essence, if people are complaining about not getting VC money but can’t show that kind of growth as a small percentage of a close addressable market then you won’t ever be a unicorn (within a funds timeframe at 10 years) and thus won’t turn the dial for a VC with a big money multiple.
Here’s an example of a fund deployment strategy that we use. But imagine if the total funds to deploy was 10 or 100x. The ‘Fund winners’ would have to be enormous.
Finally)
If you can’t show that growth/opportunity - then all is not over - Angels don’t need you to exit at 10bn because their total deployable capital isn’t as large.
At Community VC our investment thesis is different. In a nutshell, we look for companies that can generate cash fast with new and unique business models that open up markets in incumbent dominated sectors that aren’t crazy but are looking to try and find $250-$500 million exits. Without raising much money.
As part of our Community Due Diligence we embed people into the due diligence process so that we don’t make mistakes like this – for instance, I know and spoke to many people in that industry, including people who worked at companies like Airbnb that gave me very direct “no’s” to the possibility of Kiki working out, but as I said, sometimes based on the four elements above you have to send it.
Caveat - I (Jock) invested the minim possible amount I was allowed into Kiki with the literal investment reasoning of wanting to see how "Gen-z’s do viral growth marketing, and to see if someone who acted like I did 15 years ago, could actually make it work at global scale". With the memo commentary of: ‘holy shit this guy is loose and doing somewhat illegal things’.
Jock