1Mby1M Virtual Accelerator Investor Forum: With Nnamdi Okike of 645 Ventures (Part 3)

Sramana Mitra: Also I think it’s much easier to build companies when you don’t have your scalp being poached all the time. It’s impossible to build companies when your team is constantly being poached. If you’re located in a major location where there is a lot of competition for talent, it’s very problematic.

Nnamdi Okike: Yes, that’s a great point.

Sramana Mitra: The other question I have is you do both B2B and B2C, right?

Nnamdi Okike: Yes.

Sramana Mitra: You gave the example of a company selling to a small business. You want to see about ten customers to see validation. Could you complete the picture and talk about what you want to see in validation when it comes to a B2C business? What constitutes something different. How do you think about B2C validation?

Nnamdi Okike: Probably about 75% of our deals are B2B. We do have direct to consumer companies as well. We have a couple of companies that have gotten to large scale on the consumer side. I can talk through a couple of case studies.

On the consumer side, we look at a couple of different things. The first thing we think about is, what is the quality of the business model? The way we would size up a consumer marketplace might be a little bit different than the way we size up a digital media company.

For consumer marketplaces, you can see early transactions. You can see the frequency of purchase. For a digital media company, you might want to see growth in user activity because the business model may come later. We think about the quality of business model and if there is evidence that it’s starting to manifest itself.

In the online marketplace, we are investors in the business called Goldbelly. Goldbelly is a direct-to-consumer marketplace that enables customers to access, what they call, local legendary foodmakers. These are foodmakers around the country who have local followings. People love their food but these foodmakers may want to sell nationally.

Goldbelly provides a platform for them to do that. They provide marketing and an e-commerce platform. We describe it as the hub for foodmakers to be able to sell nationally.

When we first came upon that company, they had done roughly about a million of gross transaction volume in their first year. They were tracking to three million of gross volume the next year. They had early evidence of revenue. They’re really showing that they could bring on foodmakers. At that time, they might have had 30 or so different food establishments who were selling.

When we looked at Goldbelly, the thing that was most interesting to us was a combination of the frequent purchasing by end customers, the high level of satisfaction, and the growth in revenue. We were able to get comfortable with that business opportunity. Then we reinvested in the Series A. That’s an example of a marketplace deal.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Nnamdi Okike of 645 Ventures
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