1Mby1M Virtual Accelerator Investor Forum: With Rob Schultz of Serra Ventures (Part 2)

Sramana Mitra: To write a check for half a million, what do you like to see in terms of proof points or validation?

Rob Schultz: Primarily, we’re looking for great teams. What’s special about the team? We love opportunities where the founder might kick off a story that goes something like this, “I’ve worked in an industry for x number of years. There was this problem that I saw that nobody solved. I left and started a company to go solve that problem.” That’s an ideal story.

The entrepreneur has deep domain expertise that is complemented with a strong technical team. These days, we’re getting good at identifying product-market fit. It’s another cliché term. Companies are now finally starting to talk to customers and get feedback on their product.

Last, we look for some revenue traction. We don’t have the magic million dollar ARR numbers that a lot of VCs look for. We do look for referenceable revenue. Do you have different drivers of that revenue? Can we validate those types of drivers? It’s difficult for early-stage entrepreneurs to get early revenue. We try to see through that a little bit and look for on-model revenue.

Sramana Mitra: And repeatability.

Rob Schultz: Yes. In the round that we typically get involved in, we look to hone that repeatability. We need some evidence that we can validate. A lot of those early dollars is for go-to-market teams to start a lot of the repeatability.

Sramana Mitra: What does that translate into? You’re not looking for $1 million ARR, which is good because it’s hard to get to a million ARR for most SaaS companies without some prior funding. What is the ARR where you tend to hit that kind of viability validation?

Rob Schultz: It depends. Each opportunity is unique. We do scientific instrumentation and devices. They tend to be pre-revenue deals. For the software that we’re looking at, we’d want to talk to three to seven type of customers that can get us comfortable with the value proposition and the pricing strategy.

Sramana Mitra: You started off by saying that one of your core differentiation points is geography. Can you elaborate?

Rob Schultz: We’re in the Midwest and very bullish on our Midwest thesis. We look for tech ecosystems that are emerging. We started in Champagne. We did a lot of our deals for fund one in Champagne. We quickly made an observation that this development of innovation is happening in different areas in a very consistent manner.

We’re doing deals as far east as Cincinnati. We’ve also carved out an area primarily due to my partners’ network. The San Diego and California areas shares a lot of similarities. We’ve done quite a few deals between LA and San Francisco as well.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Rob Schultz of Serra Ventures
1 2 3 4