I had the pleasure of interviewing Chris Cunningham, active tech startup investor and founder of C2 Ventures, a privately-held investment firm with a focus on consumer, data and financial techs. Chris and C2 Ventures provides seed capital and hustle to early-stage companies both directly and via limited partnerships. C2 Ventures’ current portfolio includes 15 investments, three of which have been acquired or returned a multiple for the investors.
Jean: Thank you so much for joining us! Can you share your story about how you got into the VC space?
As a serial entrepreneur who has started multiple companies over my career, I was perplexed and frustrated with how broken the current venture model works for early-stage companies. The harsh truth is founders fuck up a lot and mistakes are made which, in short, allows start-ups to fail but it doesn’t have to be this way.
I believe the delta between first-time founders and institutional capital is too wide. Founders need a middle layer of support to help them drive their business forward and avoid classic mistakes. Let’s face it, the first two years of a start-up’s life are tough. To survive and thrive, you want hands-on, head down, get shit done investors and advisors on your side.
I didn’t see anyone in the space thinking like this, so I started investing myself four years ago and today have a 7X return over the industry standard 2.5X. We don’t just invest, we work beside you. Today C2 Ventures is the industry’s first operator-run, early-stage investment platform.
C2 Ventures’ fund’s focus is on the following five pillars — without which, companies are unlikely to achieve a Series A investment or scale:
Jean: What kinds of startups do you typically work with?
Investment sector focus where we have domain experience and can provide value as builders and operators. Focuses include:
Jean: What do you look for in the management team of your investment companies?
Entrepreneurs are more than ever, needing the support, guidance, expertise of “Operators Money,” to compete, scale and execute on their vision. So, we look for teams that are open to listening, humble and willing to have experienced operators sit in the trenches with them.
Jean: Can you share a story of a successful Angel or VC investment? What were some of the highlights?
I was the first investor and only advisor into Arbor, a data company that drives net new revenue for apps and publishers leveraging used data assets. I worked very closely with the founders for more than a year leveraging my network to fast track their commercial efforts. Arbor sold for over $150M to Acxiom two years later bringing a 30+X return to shareholders. I learned that there is no match for the power of top tech and the teams that support it. Arbor had a world class CTO out of Google and supporting team that build products and pipes which drove huge value in the publisher ecosystem.
Jean: What is one piece of advice you would give a startup?
Don’t do it unless you are willing to risk it all and willing to take crazy risks to will your idea to win. Also, surround yourself with experienced operators who have failed before you. It doesn’t make sense for you to learn the hard way.
Jean: Do you have a favorite book that made a deep impact on your life? Can you share a story?
Principles by “professional mistake maker” Ray Dalio, founder of Bridgewater Associates. The book is a #1 New York Times bestseller.
Here are three stories that pertain to Principles from my experience:
1) One of my favorites is that even though it might be tough or uncomfortable to talk about certain things, it’s better to tackle it head-on, as you are just avoiding an inevitable. Thus, radical transparency! You’ll get to the same outcome a lot quicker than if you drag it out and spend a lot of mental power on avoiding tough talks.
2) A company is a sports team, not a family.
3) Anything that is being done needs to have a clear responsible party. Be aware of “We need, we should. Every meeting and action point should have a clear conclusion and clear accountability.”
Jean: What are your “5 Things I Wish Founders Knew Before They Pitched To Me” and why. Please share a story or example for each.
1) The worst thing you can do when pitching me is calling out big names as a calling card that an idea will be successful, like a big VC or someone who has had wins. This is an important data point, but not the way to get my attention. Touting brands, people’s names, etc., is only a fraction of a story vs knowing your market, competition, showing traction, and proving you are ok with bootstrapping.
2) I, also, wish CEO’s didn’t always celebrate “headcount” when highlighting their business metrics. Headcount is not always the best indicator for the health of your company. It can also mean a high burn rate, internal inefficiencies, and inability to turn a profit
3) In addition, a startups cap table is simply a piece of paper that holds no real value in the early days. If you elect to hold equity close to protect your interest and miss opportunities to partner with others, your cap table may end up with the same value it did when you started. Thus, don’t pitch it.
4) Know your shit before walking into a meeting, do your homework, have a plan, show you have taken risk and have some social proof points and traction not just a PowerPoint presentation. Understand my thesis, partners and what I look for, such as technical co-founders.
5) Chasing money vs. the personal story. I believe every founder should have a real story or narrative of how they arrived at the point of wanting to start a company. It could be the emotional hard knocks tale or simply realizing they experienced pain and frustration in their professional or personal lives and they wanted to solve for it. On top of that, the ability to explain why they are the person to build this company. I can get turned off quickly if the company is going after buzzwords because they think there is money there, like Blockchain or AI, vs. having it be more personal.
Jean: Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this. :-)
I’d like to hang with Mark Wahlberg, I’m from Boston so it starts there but love how he has diversified so well outside modeling in his underwear and starting businesses. I think it would be a very fun lunch.
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Jean: This was really inspiring! Thank you so much for your time.
-Published on September 2018