The Virtue of Frog Kissing
Sometimes startups forget that we VCs are raising capital just like they are. (Well, most of us are raising capital.)
Those of us who have chosen to raise from within the real estate and construction industries have a serious challenge but also a distinct advantage.
Our challenge is that when we raise funds from large developers, owners, PE firms, asset managers, retailers, general contractors, engineering firms, architects, etc, almost none of them have ever invested in a fund of any kind. Certainly not a venture capital fund.
So there is an extraordinary amount of education that we have to create around how VC funds work and what they can expect. (“No, you will not receive yearly dividends.”)
On the other hand, this fundraising becomes a self-selection process for early adopters in commercial building technology.
Think about it — I am working every day with the largest stakeholders on the planet in the real estate and construction industries. I am directly asking them to invest real dollars (not time, not resources, not pilot projects) into BuiltTech startups. That is an incredibly effective filter about who is actually serious about innovation in the space.
I say “serious” because seemingly every CRE/AEC firm on the planet has figured out that their employees, board of directors, and partners care about technology as it has consumed almost every other industry. So LinkedIn, Twitter, and trade magazines are littered with thousands of quotes on “the crucial importance of innovation and disruptive technologies, blah blah blah . . .”
How many of those talking heads have written checks?
Those are the real early adopters. Those are the princes we are looking for.
It’s easy to talk about how cool VR headsets or Robots or Solar Panels or (insert cutting-edge technologies here) are. Who bought one? Better yet, who invested in the company? That’s what you really want to know if you are a startup. Those will always be the hottest prospects for your sales pipeline.
Because the truth about startups is you think you need capital, but what you really need is sales. Capital is just a mechanism to speed/increase/augment sales. Sales come from knowing who to target. Knowing who to target comes from having a strong way to filter the talkers from the doers.
So, as frustrating and time-consuming as it is to constantly kiss the frogs in our industry, we have created the ultimate filtering mechanism for who the REAL early-adopters (princes)are in BuiltTech.
And if we do a thorough job in our fundraising, all of that frog-kissing will eventually create a database of every prince in the industry.
Imagine getting funding from us and then the next day having a curated list of dozens (if not hundreds) of emails and phone numbers of the most eager and capable buyers and users of your tech.
That’s what you call a strategic investment partner and not just a source of capital. That’s Shadow Ventures.
So, if you are a startup reading this, consider it a primer on what you should expect from us as a strategic investor.
If you are a large player in the industry, pucker up. Because after a few thousand of these conversations, I know a prince when I see one.
