Seed Capital From Angel Investors: Brian Garrett, Co-Founder And Managing Director, Crosscut Ventures (Part 8)

By guest authors Irina Patterson and Candice Arnold

Irina: We talked about entrepreneurs’ past experience and how much weight it carries when they are looking for funding.

Brian: It’s obviously better if you can grab, as an example, a Brian Lee, who is a co-founder of LegalZoom, and then founded Shoe Dazzle. You can look at him and say, “Yeah, there’s credibility here that he’s going to know how to scale this next idea.” He has since gone and done that. Those are, obviously, the best situations, but when you click with entrepreneurs and you buy into their vision and you can see their passion, as long as they show a credible path to executing, we’re willing to take first-time entrepreneur risk.

Irina: So they can be college drop-outs?

Brian: Yeah. I don’t think college education has any correlation with your ability to be a great entrepreneur.

Irina: You went through college [laughing].

Brian: Sure. That’s why I’m a venture guy and not an entrepreneur.

Irina: How much of a team do founders have to bring to the table?

Brian: You don’t have to. A lot of these have been single entrepreneurs with resources to help them on the development side. I definitely prefer not to do just founders with no technical team ready to go, whether it be outsourced development or not.

They need to be savvy enough to know how to put the pieces in place so that they’re not starting from scratch. I think you can put together a skeleton team without funding. Get people to validate the vision and help you start architecting what the solution will look like.

It doesn’t have to be a full-blown team on salary ready to go. These are lean startups. It’s a lean philosophy. Do as much as you can on as little capital as possible. Keep it together with tape and glue, but make something happen, and validate that what you’re doing is interesting.

Irina: What about character traits?

Brian: We’ve used this phrase for years, my partner and I – and we got from our partner at Palomar Ventures – “Up Everest without supplemental oxygen.”

It’s a balance of, I’m going to take this hill no matter what, against the realities of the world and the complexities of competition and all the things that make a startup hard. So, understanding what’s realistic, but believing in a vision that you will not be stopped in trying to achieve. That’s the most important piece.

Irina: What do you do with the deals you don’t invest in?

Brian: We try to be as helpful as possible. We try to not squash the dream, because, again, who am I to tell you your idea’s not a good one? I’m just one guy with a perspective and a lot of data to give me that perspective.

Venture is about pattern recognition, and arguably, I’ve looked at more deals than any individual entrepreneur has, but I’m not a domain expert in every category. So, we’re trying to see patterns that resonate with experiences we’ve had that have led to success.

I might tell an individual entrepreneur that I’m not the right investor for his or her idea, but I don’t ever want to tell them that their idea’s a bad one. I could be wrong . . .  probably I am.

So, that’s the most important piece. Don’t squash the dream and the vision. Just try to articulate why you may not be the right investor for that opportunity.

We take a hard stance at Crosscut to not invest in things we don’t know something about. If we are investing in something we don’t know much about, then we’re just money.

There’s money out there in this world. We need to find opportunities where we can help, we can bring partnerships to the table that will help move the business. That’s why we do what we do. We love that element of company building, connecting the dots, and putting people in touch who can help each other. That’s the best part about being a venture capitalist.

Irina: Do you refer the entrepreneurs you don’t invest in to any other place?

Brian: Generally, I’ll talk about other opportunities to raise capital, but it’s on them, primarily, to figure out how to get in front of those other groups. Whether it be Tech Coast Angels or Open Angel Forum or another group.

This segment is part 8 in the series : Seed Capital From Angel Investors: Brian Garrett, Co-Founder And Managing Director, Crosscut Ventures
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